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.


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