NCPA - National Center for Policy Analysis


March 28, 2007

Delegates from the United Auto Workers (UAW) are meeting ahead of the upcoming contract talks with domestic automakers.  If the UAW isn't careful, it could kill America's Big Three, says Investor's Business Daily (IBD).


  • Union health care benefits alone add more than an estimated $1,000 to the price of every domestic car.
  • Add another $300 to $500 per car because of stringent work rules won by the union in negotiations, and American-made cars have a hard time competing with cars made by foreign competitors.
  • Overall, Ford, GM and Chrysler lost $16 billion last year, and are projecting that they will have pay $12 billion this year in health care costs for their U.S. employees, retirees and family members.

While the union seems to be acknowledging that economic reality dictates that it cannot be as aggressive as it has in the past, it probably hasn't fully learned the lesson, says IBD.   In fact, according to a UAW resolution, union bosses will ask for a five-day workweek, with each day involving less than eight hours, or four nine-hour days in a standard workweek.  That's in addition to not budging on health care.

Do they truly believe the carmakers can keep paying out the same wages for less work, that productivity and quality will get better with fewer hours worked and no cut in wages?  That's a mind-set that will ultimately kill the U.S. auto industry, says IBD. Unless its leaders and members concede that it's been overtaken by economic reality and begin to act accordingly, the UAW will soon move into its rust years.

Source: Editorial, "Head-On Collision," Investor's Business Daily, March 28, 2007.


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