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Industry’s future hinges on UAW deal

Sam Eaton Jul 16, 2007


Lisa Napoli: Meanwhile more trouble could be ahead as the latest UAW contract looms. Sam Eaton says negotiations for the future of the U.S. auto industry begin this week.

Sam Eaton: Wall Street is already pricing Big Three stocks on the expectation that a “transformational” deal will be reached between automakers and the UAW.

At issue are the so called legacy costs. GM, Ford and Chrysler have a combined $90 billion in under-funded retiree health benefits.

But the UAW’s recent deal with bankrupt auto parts supplier Delphi to slash pay and benefits hints that the union is ready to compromise. Clark University labor expert Gary Chaison says that’s because the union has no more alternatives.

Gary Chaison: They realize that if there isn’t an agreement reached the possibility of a strike is going to be mutually assured destruction. Both the company and the workers will come out losing.

Union leaders deny that they’re in a concessionary mode, but Chaison says the bar for success has definitely been lowered. He says the best case scenario for the UAW would be a freeze in pay and benefits.

I’m Sam Eaton for Marketplace.

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