Filed under: Chrysler, LLC., Ford, GM, UAW/Unions
And thus it begins: All domestics now in historic talks with UAW
Industry insiders and analysts have been talking about the 2007 UAW contract talks since before the ink dried on the current contract. The fact is, the talks have been eagerly anticipated because the Detroit three are falling apart, with the three companies losing over $15 billion last year alone. The wait is now over as the bargaining has officially begun after GM and Ford followed Chrysler to the opening ceremonies. The car companies make no bones about wanting concessions on the healthcare front, more flexible work rules, and lower wages. The union, on the other hand, say they're not going into the talks in a "concessionary mode". Yep, the contract jockeying has begun.
[Source: Automotive News (subscription req'd)]
Many are pointing to Ford as the company with the most to lose, so word is that Gettelfinger and his team will pick the Blue Oval as their target company in talks. In a scary and surprisingly backward statement, Gettelfinger mentioned that Ford was a company with "a lot of cash". Wow, that's bad. Ford mortgaged their assets for $23.4 billion so they could fund a turnaround (which of course they'll have to pay back if they succeed) that included paying billions of dollars for UAW workers to not work anymore.
Things aren't much better anywhere else for the domestic automakers. GM pays $4.8 billion per year in healthcare costs, and Toyota pays $30 less an hour per worker in labor costs. Daimler basically paid Cerberus nearly $700 million to take Chrysler off its hands, which didn't bode well for anybody (except for maybe Cerberus).
As bad as it is for domestic automakers to compete with extraordinarily uncompetitive labor costs, the average worker doesn't have it much better. They're being asked to take a pay cut so they can have less for their children's college, for retirement, or to just to pay bills. The rest of the US manufacturing sector has already faced this situation, and many of the workers that stood firm against pay cuts saw their jobs move to low-cost labor from countries like China. The 2007 labor talks will be drawn out and sometimes painful to watch unfold, but in the end, change is inevitable, no matter what anybody is saying in July.
Reader Comments (Page 1 of 2)
FLR 8:26AM (7/24/2007)
I'm originally from Pittsburgh. This same scenario played out back in the 1970's with the Steel Mills. The guys that worked there made fantastic money. I'm talking 50k+ back then which is well over 100k today.
Well, it was just turning into a global economy then and China and others were getting into the steel business. US Steel sat down with the union and said we need to pay you X in order to be competive. The union said no, you always say this, therefore, we voted ourselves another increase.
Well, I think you all know how the rest of the store goes. All the blast furnaces from those factories now reside in China.
The UAW needs to get a clue and realize that unless they unionize the Toyota, Mercedes, Hyundai, Honda and BMW plants, they haven't got a leg to stand on with the big 2.5.
They MUST take lower wages, lower benefits and actually work to get paid....just like every other worker in this country.
Hey, I'm in IT. I don't get paid overtime no matter how many hours I work.
Get over it and realize that times have changed. You either change or lose your job. There are plenty of people across the country that would love to work for GM, Ford or Chrysler for less money.
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Steve 8:45AM (7/24/2007)
A scary proposition. If the union decides to strike this will be the death knell for Ford, GM and Chryslerberus. My gues is they come to some minor concessions, make a VEBA for the healthcare and its business as usual. If either one stands their ground they all will fall. Not that if they don’t make major changes they won’t file chap. 11 anyway I just don’t see the environment open to that sort of change.
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Rambo 10:18AM (7/24/2007)
Not exactly. The domestics want this to finally come to a head. They would like the UAW to deny any pay/benifit cuts because this will bring the country to their side. They can file for bankruptcy and avoid many pension obigations as well as ship production oversees without loosing face.
SAVE WHATS LEFT OF AMERICAN INDUSTRY!
Joe K. 1:01PM (7/24/2007)
I see this all as the discussions that will either see the unions come back to reality, or the defining point of the Big 2.5 declaring and impasse and voiding all current and future contracts. These are the meetings. The big 2.5 have 2/3 new leadership mostly because of the hemorrhaging of capitol of recent. Mullaly and Cerberus will take a hard line, mostly because its what they were hired to do. Wagoner will attempt to take it in the pants, but when he sees the other two have spines, he may try to grow one. All said i see these negotiations ending very poorly for the union if they are unwilling to concede on certain points. Bankruptcies and Impasses do not help the union one iota.
Prof 9:42AM (7/24/2007)
The days of forktruck drivers making $100k annually are coming to an end, one way or the other.
It all boils down to supply and demand. There's a certain supply of labor with a given skill set and there's a certain demand for that same labor. Where the demand and supply curves intersect dictatest the equillibrium price for that labor.
The UAW has been able to keep that price artificially high for a long time, and good for them. However, times have changed.
Certainly management bears a lot of blame for designing ugly, low quality cars and keeping the bean counters in charge. That's going to have to change too.
In the mean time, the issue at hand is out of whack labor costs. Not just out of whack compared to China/India/Mexico, but out of whack compared to the majority of the U.S. workforce. Time to get with the program UAW.
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ahkmel 10:11AM (7/24/2007)
Was the UAW really quoted saying "concessions"?
I would suspect that speaker meant secessions. Perhaps I'm misunderstanding the context.
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bison 10:15AM (7/24/2007)
This is the beginning of the end for the UAW. The only variable is whether they take GM, Ford, and/or Chysler down with them. It would be better for all concerned if they didn't.
Jobs that pay market wages are far better than no jobs at all. Think about the thousands of UAW workers who have never lifted a finger to better their own education, unemployeed and just about worthless in the 21-century job market. These people need GM, Ford, and Chrysler. If the UAW drives the 2.5 into bankruptcy, these workers are in a lot of trouble.
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Mr. Oak 10:45AM (7/24/2007)
I don't see the union on strike in any single country taking down the global conglomerates. GM & Ford both have plants in Mexico that will not be affected by the strike. A sympathetic strike by the CAW would however compound their troubles.
I think we can all now appreciate the strategic value of them moving plants to Mexico, Canada and Brazil.
Also, the Big 2.75 has so much back logged inventory, the workers and the dealers would feel the pinch long before GM, Ford and Chrysberus does. A short term strike might actually do them some good.
Should the come to a deadlock, the big 2.75 should probably stage a lock out.
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ryan 11:42AM (7/24/2007)
i think the UAW has something in their plans that allow their workers to be paid even during idling plants, so taht doesn't help a significant amount.
my concern is what they overall are paid. if you take a look, an average salary for the UAW is higher than college professors and many other "white collar" positions. i think this unacceptable in the grand scheme of things, not only because i went to college, but because it has and will kill domestic manufacturing.
and, possibly even scarier, is that if the manufacturers do start going down (even further), that the government may throw in some help to keep the "jobs in america." what a great situation for the UAW, as they're basically guaranteed to get paid, regardless if the source is someone buying a car or taxpayer dollars...
i hope it doesn't come to that, or maybe i'm completely ignorant here. thank god "add your comments" doesn't require qualifications to do so.
Mr. Oak 12:03PM (7/24/2007)
my concern is what they overall are paid. if you take a look, an average salary for the UAW is higher than college professors and many other "white collar" positions. i think this unacceptable in the grand scheme of things, not only because i went to college, but because it has and will kill domestic manufacturing.
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Hey Ryan: You are not going to get any argument from me. Unions in NYC are the same way.
Back when I was in the US Navy, I became a crew member of a new ship that was under construction. This was at the Bath Iron Iorks in Maine. Granted there were a lot of specialties (jobs) that were very demanding and very technical. There were also a lot of union workers there with little or no skill, whose salaries were way over the top.
Riggers, painters, cleaners etc.
Here is an example: Fire Watches - these were the folks that would stand by with a fire extinguisher while a welder welds. One was required for each side of bulkhead (wall) being welded. No skill required. see fire, douse fire or sound fire alarm. The deep fat fryers at fast food joints required more skill. These folks were PAID. This was back in the mid '80s, and back then, they easily doubled what a NYPD recruit makes today.
Compy386 10:50AM (7/24/2007)
People always blame bean counters for ruining cars, but that's hardly the case. If you have engineers and designers running the show everything would be made out of chrome and have the biggest engines. Sure maybe most autobloggers would love that, but the average American drives Civics and Camrys. Fact is, domestic auto companies have just had bad bean counters. At the end of the day it's business and it'll be the business people's job to figure out what makes money. That's not always the most expensive car you can build.
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Stéphane Dumas 11:44AM (7/24/2007)
only ultra-bland, when a couple of decades ago we wanted more "pizzaz"
I quote a post I did in GMInsidenews forums http://www.gminsidenews.com/forums/showpost.php?p=1076195&postcount=49
"In the late 1950s some denounced the overuse of chrome and 2 or even 3-tone paint used in the auto industry. Now the pendulum is on the other side with the extreme blandness, it's time to bring back the pendulum to the center." and someone else seems to be agree with me http://www.gminsidenews.com/forums/showpost.php?p=1076261&postcount=52
Now then Toyota and Honda had lots of profits, let's ask them for adding more pizzaz and soul before they hired some beancounters themselves to cut some costs ;-) (and before the possible UAW invasion at the Toyota Georgetown KY plant http://www.autoblog.com/2007/05/29/uaw-making-another-push-to-unionize-toyotas-georgetown-plant/ )
Tagg 11:20AM (7/24/2007)
GM, Ford, Chrysler are all corperations and basic finance and business theory is corperations last forever. Now its not entirely true but it is very hard to shut a corperation down or have it go belly up because there are so many investors/stakeholders in a corperation and they have to agree to close.
Secondly, even if they all went bankrupt (something many posters are rooting for, why I don't know) they still would be around. With all the bankruptcy laws they could reorganize and in effect void the UAW contract if it meant returning to profitability. I also beleive that when the Bush administration said they would NOT bail out any of them is just tough talk, trying to get them to motivated so they don't rely on government assistance as a backup. I think if things really went to hell the government would step in and help these companies out to save the industry.
Even if the UAW went on strike what are they going to hurt at GM? Not Silverado sales, not Cobalt sales, or Pontiac sales. Much the same for Chrysler and at Ford it would hurt the sales of the Edge and Fusion and those late summer Mustang sales but after those Ford isn't selling much either.
Funny thing is though, the Focus is actually selling pretty well too but I read they have a good supply of the current and have started a supply of the "new" ones.
So go ahead UAW, beat your strike drum because no one is listening this time.
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brandegee 12:04PM (7/24/2007)
What are you talking about? It's not sales #'s, it's profit margins that are killing domestics. No profits, no development, no exciting new products to compete.
Great, Focus is selling well. That's, what, $49 profit a unit. People are buying them because they're cheap as dirt, fuel efficient and the new one is being reduced to *one* bodystyle. Great.
And if you think the Bush admin will bail out corporations that represent all that neo-cons hate about unions, think again. It's not the 80s anymore--Americans can work at Toyota and Nissan plants for all the gov't. cares. As long as nobody riots.
The UAW and Big 2.1 are just biding time until a Democrat gets in office...then the bail out begins.
Tagg 11:39PM (7/24/2007)
What are you taking about?
"Great, Focus is selling well. That's, what, $49 profit a unit. People are buying them because they're cheap as dirt, fuel efficient and the new one is being reduced to *one* bodystyle. Great."
Yeah it is great. The car has been paid off for years. Now they are just milking pure profit because the car is so old. Just like the Town Car and Crown Vic it is so cheap to make any profit on it is good.
And it IS about sales as well as profits because you can't turn a profit if YOU DON'T SELL THE CAR!!!!! So it is about sales especially when they are selling fewer than the Asian companies.
"And if you think the Bush admin will bail out corporations that represent all that neo-cons hate about unions, think again. It's not the 80s anymore--Americans can work at Toyota and Nissan plants for all the gov't. cares. As long as nobody riots."
Thats bull too because EVERYONE knows Toyota will NEVER build all it vehicles sold here in the U.S. Look at today were 50% of Toyotas sold here are imported from Japan. That will not change anytime soon so maybe I'm an optimist but I don't see ANY party shutting the door on the auto industry and if you think the Democrats are going to save the day on everything you are way off. They are no better than Republicans, in fact its the same crap sold in a new package.
Chris P. 12:12PM (7/24/2007)
a) We need to keep manufacturing capacity in this country out of national security concerns, and don't forget it.
b) American workers aren't cost-competitive because we don't have a single-payer, government-run healthcare system. Fix that, and suddenly Toyota won't have much cheaper labor costs. Everyone acts like the unions are the difference between Toyota/GM costs, but it's the healthcare.
If we don't take care of this healthcare issue, eventually there will be no manufacturing capacity in the United States.
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Mr. Oak 12:23PM (7/24/2007)
brandegee:
I don't agree with bailouts. However, there is no way a bailout for the Auto Industry will cost tax payers what Haliburton (Now headquartered in Dubai) bilked them for and ran out of the country before the subpoenas start flying.
National health care bad for Americans - Tell that to the Cubans who with, crappy obsolete medical equipment generally have better health care and better health than most Americans. Oh, they outlive us too.
Haliburton, Enron, MCI Worldcom is what's good for America. As is Insurance companies that don't honor their policies or outright cheats Hurricaine victims out of their settlements.
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Aki 12:46PM (7/24/2007)
"National health care bad for Americans - Tell that to the Cubans who with, crappy obsolete medical equipment generally have better health care and better health than most Americans. Oh, they outlive us too."
Ugh, let me guess: you got indoctrinated by Michael Moore's tripe? Moore is wrong: he used the 2006 United Nations Human Development Report. The 2007 lists US life expectancy at 77.9 years and Cubans with a life expectancy of 77.2. So please, before goading some blissfully ideological rhetoric of free healthcare or cheap healthcare, read up on it instead of relying upon some propagandist's word.
Back to point, UAW is a fossil that must change or die. It can't afford to sit on its lavish wages and slaving demands. It does and all it will do is bring the Big 2.5 down with them. And that'll force the companies to outsource more to China, which is bad for autoworkers anyway. The union is a leech that's sucked too much money out of GM/Ford/Chrysler.
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Mr. Oak 12:57PM (7/24/2007)
No, did not see Michael Moore's movimentary. Where did you get your life expectancy figures from?
England, Canada, Japan all wrong about national healthcare.
Did the lobbyists of thieving Insurance and predatory pharmaceutical companies get to you?
Aki 4:28PM (7/24/2007)
Where did you get your life expectancy figures from?
Man, didn't you read my comment? It's from the 2007 United Nations Human Development Report. The same report used by naysayers that Cuba has higher life expectancy (but using older figures). Unless you're wanting to say that even that is controlled by "thieving Insurance and predatory pharmaceutical companies." Because you know, everybody who isn't for "free" healthcare must be a corporate shill.