An Auto Industry Partnership

It's interesting that Ford and General Motors are laying off thousands of workers and closing dozens of plants in an effort to compete in the globel market.

The market is dominated by manufactures from over seas that have built facilities in this country to compete directily with the American manufacturer.

So what is so good about the imported cars? Why are the imports slowly but surely dominating a market that traditionally has always been American? The designs aren't any better, I don't believe. The American manufactures have some goofy looking cars, but so do the imports.

If you listened to the "experts" in the media they all seem to sing the same song about Detroit not having what the consumer wants. In reality, Detroit can't produce a car with the same quality at the same price as the imports. There are cost constraints that must be meet for a manufacture to produce a particular car for a certain price range.

Just think about something for a minute, if each manufacture spent the same amount of money building similar cars, and then sold them with nearly the same price tag, the customer would only have to make a decision based on the looks of the car. Manufacturing techniques are similar and the same materials are available to each. So, design alone would determine success. But that isn't how things are in the real world.

If the manufacturer can only sell a particular car at a certain price to meet competition, because the materials that will be available and the labor costs will determine how that car will be built, and that's rub. To be competitive, they have to sell the car at price that meets the competition.

Ford and General Motors can not compete with the other car manufactures because the cost of labor is not the same for each competitor. The American manufacture has about $1100 or more in labor costs per unit than the import manufacture. Why, you ask? That's an easy one to answer. The import manufacture doesn't have a labor union. The American industry is being chrushed by a huge heatlh care and retirement contract agreements.

The reason for these huge labor costs are not just the union's fault. The American manufacture from the beginning never really got down and dirty in the negoitions for new contracts. They thought it was easier to just give the unions what they wanted and then pass the costs on to the customer. They did this for years and now it has come back to bit them in the rear.

It's bad enough that the hourly rates that the workers get is some of the highest in the country. But the retirement and health care costs that the management agreed to over the years has proven their undoing. The labor unions, to their credit, have shown that they are the strongest negotiators. They squeezed the best deals for the workers out of a back sliding management. But now, faced with massive lay-offs and a shrinking industry, how will the unions deal with the possibility of even further reductions in their ranks, maybe, if things get worse, even the total collapse of the United Auto Workers itself.

The question that remains is 'can the union change with changing conditions, or will they stand fast and maybe go down with the ship'. I believe that the union has to change. The union and management has to develop a bridge that will allow a true picture to develop of how bad the situation really is and how, together, they can get back to were they can become competitive again.

One of the most important things the union can do at this point is to start taking on more responsibility for health care, and postpone some retirement benifits. In other words, they will need to convince the membership that a new contract, giving up some of these benefits that they now enjoy, is the only way for the union to persevere the industry and it's own well being.

If the union and management can not see their way clear to form a partnership for survival, then, I believe, the American side of the auto industry will become a mere shadow of it's former self.