A chance at recovery?

In an Associated Press article regarding the upcoming UAW talks with Ford and GM, Laurie Harbour-Felax, managing director at Stout Risius Ross Inc., a firm which studies auto company costs, is reported to agree "with the union that companies must do more to cut costs and become more efficient." Did I miss something? When did the UAW start feeling that the companies should "do more to cut costs and become more efficient"? The biggest problem that has plagued Ford and GM is the Union's staunch anti-modernization stance. They've long been the bastion of refusal for change. That's the primary reason Ford and GM spend more to build a car: it takes them more man-hours to do the work so it costs more. The added per-employee costs only compound the issue. If, as is suggested, the Union is willing to allow Ford and GM to modernize their processes and factories to be faster and less labor intensive, the companies have a chance at recovery.

Assuming, of course, that John Dingell's commitment to raising CAFE doesn't cripple the companies first.

UAW to Hold Talks With Ford, GM
ABC News

Ford Motor Co. and General Motors Corp. have more at stake than usual as they begin their traditional talks with United Auto Workers: cutting labor costs may be key to their survival.

The traditional handshake ceremonies with the union were to begin Monday with GM in Detroit and Ford in Dearborn, although talks already have been under way for months. The union formally opened negotiations with Chrysler Group on Friday, and the national contracts with all three expire Sept. 14.

The three automakers lost a combined $15 billion in 2006 and are in the midst of shrinking themselves and rolling out new vehicles to better compete with Japanese companies. Industry analysts have said reducing labor costs is critical.

Ford is in the worst shape of the three, having mortgaged its factories to set up a $23.4 billion line of credit to cover losses and pay operating expenses while it restructures. Ford lost $12.6 billion last year and $282 million in the first quarter of this year, and it doesn't expect to make money again until 2009.

Analysts say Ford likely will seek deeper concessions than the other two automakers, perhaps including temporary wage cuts.

All three say the talks need to bring them into labor cost parity with Japanese automakers, who make about $2,000 per car more in profits.

The Detroit automakers say their hourly labor costs are about $25 more than those of Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. when health care, pension, retiree and other costs are factored in.