UAW Talks Could Mean Big Concessions
February 21, 2007

What Detroit automakers gain or don’t gain from upcoming contract talks with the United Auto Workers union will determine where domestic auto producers build future vehicles, one of the nation’s top auto economists told reporters this week.

Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich., predicts hourly workers will have to give up more than ever before in order to protect U.S. assembly jobs. The UAW’s national contract with General Motors, Ford and Chrysler expires in September.

In terms of specific company requirements, McAlinden says GM has 90 percent of its UAW members poised to retire within five years, and the union needs to entice GM to replace them in the U.S. Chrysler may have to close plants that it previously agreed not to close in its last contract, he says. In the most dire case, Ford may ask the union to cut wages and benefits by 20 percent for a $1.4 billion savings and must list the rest of the seven plants it has said it will close but has not named. McAlinden says Ford is extremely worrisome in that it is burning through cash so rapidly.

McAlinden says further productivity improvements will not save Detroit automakers, rather price changes provided through lower wages and benefits will. Without concessions from the union, automakers likely will source vehicles in lower-cost countries, like Mexico, rather than the U.S.

The UAW is losing members at a rapid rate. McAlinden’s calculations show UAW membership at Ford has declined 41 percent in four years to 55,000, GM’s by 39 percent to 76,000 and Chrysler’s by 30 percent to 46,000. Even higher losses are expected as the Baby Boom generation of autoworkers retire.

Posted by Michelle Krebs at 6:15 AM under Business , Chrysler , Companies , Ford , GM | Comments (0) | digg this | Seed Newsvine