The Wall Street Journal writes [subscription required] that the fall labor talks between the Big Three and the UAW may be a "Waterloo" for the big union. The domestic car companies will try to get $10 billion in concessions to become more competitive with Japanese rivals.The union's strategy so far is to give the companies small financial relief in certain cases, but not to collapse by buckling to the pressure of releasing the troubled firms from pension and health benefit obligations.
While the automobile companies press for lower labor costs, they do so in an environment where their best leverage may be behind them a year and a half ago. There have been frequent press reports that General Motors (NYSE: GM) and Ford Motor Co. (NYSE: F) might not make it. Since then, however, GM has cut $9 billion a year in costs and its North American operations have made major strides toward being profitable. Ford has raised $23 billion to cover profit short-falls as it tries to create a model line-up that will be more attractive to consumers. Chrysler, too, will have an owner with deep pockets once hedge fund Cerberus takes over.
To some degree, the UAW can make the argument that it is not at fault for the lack of sales by the U.S. car companies. The union does not design the vehicles and it does not market them.
Painted into a corner, the UAW may decide to strike instead of being destroyed by huge givebacks. Better to have one last stand than surrender without a fight.
Douglas A. McIntyre is a partner at 24/7 Wall St.
Were News Corp.'s 'Ice Age' sequel and GE's 'Public Enemies' disappointments? 
Before the bell: Futures decline as oil falls sharply; GM's bankruptcy plan approved
Entrepreneur's Journal: Key steps for telesales success
Reader Comments (Page 1 of 1)
6-21-2007 @ 12:54PM
james Oswald said...
here we go again ; the uaw wants to make a fight out of it even if they break the auto companies . how stupid can anyone be . this same union is the one that doesn't bother the foreign companies . it makes one wonder what their real objective is . costs must be cut and controlled for the domestic auto co's to make it . one more thing , the employees will have to start buying their own products and cut out this c--- of dissing their own products . Jim
8-08-2007 @ 2:52PM
Robert said...
All you can hear from the Big 3 is "we need to cut labor costs". If they had over the years kept some of the profit that they made (and they did make it) instead of paying it out to the CEO who didn't do anything for the company then they would have PLENTY to pay the so-called legacy costs. Check the accomplishments of the CEO's and what they were paid and you can see for yourself that they were paid outlandish salaries and did nothing to enhance the company. Roger Smith is a prime example of pay without performance. All these "legacy costs" were credited to the employees and were written off under the tax laws and now they want to say that the employees are "costing" them money. The companies have already realized profits from the employees. Don't ever believe that an employee was paid for doing nothing. Also these costs were inflated as to the amounts that retirement, insurance, and other benefits added to the bottom line. Check the accounting and you will see that all was paid for long ago and now they want out from under the obligations which were promised to their workers and which was included in the wages and compensation part of their 1099's and the government collected income taxes on them also. The workers were the fall guys.