Union Rejects Contract

[Wayne Maybury]

There is a lot more involved than just the wage of $XX per hour. The big three have been in the business of producing automobiles for almost 100 years while most of the Japanese manufacturers have only been producing a high volume of cars for a couple of decades. So what you ask?

GM, Ford, and Chrysler signed some very interesting contracts with the UAW in the 50s, 60s, and 70s when they had the market to themselves and they were making significant profits. These contracts included fringe benefits for retired as well as active workers.

The big three now have many more retirees than active workers and to make matters worse, they don't have the market share they once had. Since the off shore companies haven't been producing cars all that long, they do not have nearly the amount of retired workers.

While all kinds of numbers have been bantered about, GM has between $1500 and $2000 of benefit costs in each unit it sells. Compare that to Hyundai that has less than $100 per unit sold. GM, Ford, and Chrysler have a significant cost disadvantage before they evn turn the lights on in the morning.

The wonderful contracts signed 30 or 40 years ago are really hurting the big three today as their aging work force retires and they continue to lose market share. Membership in the UAW has dropped from 1.5 million in 1979 to just over 500,000 today. Fewer and fewer workers are supporting more and more ex-workers. There is no simple answer to this difficult problem. Either the UAW accepts reductions or eventually there will be no jobs left. I am not saying that all of this is the union's fault but I am saying that they were benefiting during the good times and now they are going to have to share the pain in the bad times.

I believe that the UAW (and CAW) do have a very legitimate complaint with the government in one specific area. The US and Canada allow foreign made (read Japanese, Korean, etc) automobiles to freely enter our countries while these countries have all kinds of barriers against automotive importation. Why should Japan be allowed to sell millions of cars here when it is all but impossible to sell an American made car in Japan? I am not a protectionist but I am definitely against one way free trade which is exactly what North America has with Japan in the area of automobiles.

Wayne