The Big Three's real union problem

If there is hope for the Big Three and for the UAW, it rests in unionizing the foreign automakers' U.S. plants.
By Jonathan Cutler
LA Times

December 6, 2008

The Big Three are a mess, and there is plenty of blame to go around. Washington lawmakers pondering the bailout for Detroit have been grilling executives of General Motors, Ford and Chrysler about their role in the crisis. But sitting by their side Thursday on Capitol Hill was Ron Gettelfinger, president of the United Auto Workers.

Even if a deal for a $15-billion to $17-billion preliminary bailout comes together this weekend to keep carmakers afloat into 2009, they will continue to be dogged by their most significant competitive disadvantage: a high-priced, unionized workforce. After all, hasn't it always been the central goal of labor unions to maximize the per capita wage bill -- including medical and retirement benefits -- paid out to its membership? Maybe the UAW is simply too good at what it does.

It seemed clear from the hearings that to OK any larger bailout plan, Congress was going to insist on cutting labor costs. Already, Gettelfinger has coughed up concessions on job security protections and delayed payment to a retiree healthcare trust and is talking about modifying contracts.

And yet there is nothing inherently unsustainable about employing a high-priced, unionized workforce. The crisis of Detroit's wage bill is entirely relative. Specifically, their labor costs far exceed the low-cost, nonunion American workforce at the U.S.-based, foreign-owned plants of competitors Toyota, Honda, Nissan and Subaru.

(More here.)