A new line for auto workers

John Dimsdale Jun 12, 2006

KAI RYSSDAL: It is a tricky thing to pinpoint a sea change. That particular instant when you know things are gonna be different. We had one today. Ron Gettelfinger is the president of the United Auto Workers union. The UAW’s meeting in Las Vegas. And Gettelfinger warned his members their generous health and pension benefits can’t last. Marketplace’s John Dimsdale reports.

JOHN DIMSDALE: Gettelfinger warned autoworkers the spiral American carmakers are in is not just a temporary cyclical downturn. These are structural changes, he says, and workers will have to make more concessions if the big three American car companies are going to survive.

If you factor in pension and health care promises, General Motors’ employment costs run about $80 an hour per worker. Burnham Securities auto analyst David Healy says that compares to Toyota’s hourly costs of more like $45.

DAVID HEALY: Gettelfinger knows this, but a lot of his membership think an $81-an-hour job is a property right. In other words, they haven’t spent much time visiting planet Earth lately.

Healy says foreign competitors have much younger workforces which means lower health-care and pension costs. David Cole of the Center for Automotive Research says American carmakers, with the help of the union, are making early retirement offers to try to get their average age down.

DAVID COLE: The trick is to survive until tomorrow. At some point the international companies here will have an older workforce than the domestics. So anything like this is very cyclical.

But others say the solution will take more than better worker/management relations. Bob Schulties, who runs the “Cars! Cars! Cars!” blog, says retirement benefits are not the whole problem.

BOB SHULTIES: I don’t think it would be an issue if General Motors, or let’s just say Detroit, wasn’t at, what, about 53 percent of the marketshare. If they were at 60-, 70- or 80-percent of the marketshare, I don’t think it would be an issue. Their product is not catching the interest of consumers.

American car companies, dependent as they are on sales of vans, trucks and SUVs, have been caught short by high gasoline prices. Adding to their problems, the downturn in housing construction has lowered demand for trucks.

In Washington, I’m John Dimsdale for Marketplace.

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