Ford (NYSE: F) and General Motors (NYSE: GM) have started telling the UAW that they are willing to move much of their production outside the U.S. if they cannot get very large concessions on employee costs.

According to The Observer in the UK, if negotiations do not go well, "Ford and GM negotiators have said the companies will have no choice but to move their North American operations to countries in Latin America and Asia."

Both car companies have been trying to set up a fund, run by the UAW, to handle most of the pension and health benefits for the UAW. This would have to be funded with as much as $60 billion from the two companies, but would take the liabilities for these costs off of their balance sheets.

But, the UAW may want a level of funding for this pool that is greater than the car companies are willing to give. Or, the UAW may want to fight for a higher number of jobs in the U.S. than GM and Ford feel they can handle. With falling vehicles sales and high costs, getting their North American operations profitable may be impossible no matter what the union gives.

All the UAW has to push back with is a strike. And, strike it may. If the UAW gives up what the car companies want in this round of negotiations, the union will cease to exist as the bargaining force that it has been for decades. The union may decide that it is better to risk dying while defending its workers that to be overrun without a struggle.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Ford (F) and General Motors (GM): New trouble for the UAW originally appeared on BloggingStocks on Sun, 26 Aug 2007 12:40:00 EST. Please see our terms for use of feeds.