Posted on Friday, January 18, 2008 - 11:54 am:

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OTTAWA -- North America's Big Three automakers would be pummelled "like boxers with one arm tied behind their backs'' if Chinese companies flood the market with low-priced cars and trucks, says the head of the Canadian Auto Workers union.

CAW president Buzz Hargrove said General Motors, Ford and Chrysler will have a tough go against Chinese automakers since Beijing places strict trade restrictions on foreign companies selling cars in China.

That puts the Big Three at a disadvantage, he said, since Canadian and American trade rules are more lax than China's.

"We're getting beat up,'' Hargrove said.

"GM, Ford and Chrysler are just like boxers with one arm tied behind their backs, where these countries that are protecting their market and shipping in here, it's just so unfair and so one-sided.''

Posted on Friday, January 18, 2008 - 11:59 am:

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Later in the day, Granholm met with three Chinese manufacturers. At each exhibit, she inspected their vehicles and asked how much the cars cost in U.S. dollars. Prices ranged from $15,000 to $20,000.

Granholm said Chinese carmakers have "come a long way" since she visited with Geely International Corp. at the auto show two years ago. And, she hopes changes to U.S. trade policy will bring their manufacturing plants to this country -- and she invited them to Michigan.

"You have a big market to fill in China," Granholm told Zhang Huaping of Chengfeng Motor R&D Co. "But when you're ready to come here, we want you to manufacture in Michigan."

Posted on Friday, January 18, 2008 - 12:00 pm:

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CAW president Buzz Hargrove said General Motors, Ford and Chrysler will have a tough go against Chinese automakers since Beijing places strict trade restrictions on foreign companies selling cars in China.

Posted on Friday, January 18, 2008 - 12:48 pm:

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"You have a big market to fill in China," Granholm told Zhang Huaping of Chengfeng Motor R&D Co. "But when you're ready to come here, we want you to manufacture in Michigan."

Posted on Friday, January 18, 2008 - 2:08 pm:

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And just what incentive could they ever have to build here?

Posted on Saturday, January 19, 2008 - 4:13 pm:

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...semi-skilled UAW auto workers now make about $72,000 annually, wages and benefits combined.

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Crunch time is here for saving what remains of Detroit's automobile industry.

UAW President Ron Gettelfinger and the three wobbly U.S. auto companies -- General Motors Corp., Ford Motor Co. and the Chrysler Group -- must bargain a radically new labor deal in order to compete effectively against fierce rivals from Japan, Korea, Europe and eventually China.

That's a tall order, to expect a new contract by September that will save the companies lots of money and also be ratified by UAW members. Labor talks opened with ritual handshakes Friday at Chrysler and continue Monday with more of the same at GM and Ford.

If they fail to make giant strides toward shrinking the huge cost advantages now enjoyed by Toyota, Honda and other competitors, Ford and Chrysler may not survive long enough to negotiate another UAW contract.

The reality is that stark.

"It's got to be big," said David Cole, chairman of the Center for Automotive Research, of the change needed in the 2007 UAW contracts with the Detroit Three. "If it's incremental, and only saves them $2 or $3 per hour, I think Ford is dead."

Most industry estimates peg the so-called all-in labor cost of an hourly worker for the Detroit automakers at nearly $75 per hour, including wages and benefits. That's about $25 per hour more than at Japanese-owned assembly plants in the United States.

Cole said Detroit must aim to close $20 of that gap in the upcoming contract, because it will be more and more difficult to do as time goes on. Here's why:

• Ford lost a whopping $12.6 billion last year, Chrysler lost $1.5 billion and GM lost $2 billion. And for the first time in history, the three Michigan-based automakers are expected to sell less than 50% of the cars and trucks in the United States this year.

• One scenario for dealing with the Detroit Three's most vexing cost-gap issue, an obligation of nearly $100 billion for future retiree health care for hourly workers, is to create a union-run Voluntary Employee Benefits Association fund to manage this benefit and take it off the company books. But that likely would require an up-front payment of $50 billion to $70 billion from the automakers. GM and Ford both have cash reserves in excess of $20 billion and can raise more cash by selling units such as Ford's Jaguar, Land Rover or Volvo brands.

• But it may be more difficult to fund a VEBA in the future if the cash drain continues. Each of the Detroit Three is burning cash faster in North America than it's coming in. And with even strong competitors Toyota and Honda boosting rebates and other incentives to sell vehicles in a soft market, cash flow isn't likely to improve markedly for the Detroit Three anytime soon.

Benefits promised to retirees make up about half the $25 per hour cost gap between Detroit and foreign rivals. Other factors include greater use of contract workers at lower pay rates by the foreign-owned plants, higher absenteeism at the U.S. companies and income security provisions for laid-off UAW workers in programs such as the jobs bank.

UAW leaders are quick to point out that labor is less than 10% of the total cost of an automobile today, and that the Detroit Three have plenty of other cost issues beyond the scope of the UAW contract.

But aside from that, and the occasional obligatory gripe about high salaries and bonus packages for the auto company CEOs, Gettelfinger and his top officers are taking a very businesslike, nonconfrontational approach to contract talks.

"We have been very creative between contracts," Gettelfinger said Friday, referring to deals in 2005 and 2006 to cut retiree health care costs and accelerate head-count reduction with massive buyouts at GM, Ford and Delphi Corp.

Quietly and methodically, the UAW also has been striking local contract deals on work-rule changes at GM, Ford and Chrysler plants around the country, helping the companies boost efficiency and quality ratings.

Also encouraging, as the union and companies tackle the daunting task of trying to slash costs while still framing a contract that workers will approve, is that the UAW has few sacred cows left to protect.

Years ago, the union stood fast against two-tier wage structures that would preserve wages for existing workers while allowing lower rates for new hires. But now two-tier deals are fairly common in the auto-parts sector.

Pattern bargaining has always been a bedrock principle of UAW negotiating -- except when it's not. The union departed from pattern in not doing a mid-contract deal with DaimlerChrysler on retiree health care cuts.

Gettelfinger signaled Friday that a return to pattern on that issue will be among the key points discussed at Chrysler, but the union has been flexible in the past on pattern -- remember the wage cuts during the Chrysler bailout period in the early 1980s? -- and may be again, if necessary.

Make no mistake, Gettelfinger and his UAW bargainers will scrap and claw right up until the Sept. 14 contract expiration to preserve every job and every penny they can for hourly workers and retirees. But know, too, that they understand how serious the current threat is to the viability of Detroit's auto companies and thus to the future of the UAW and its members.

Will the union leaders bend in the spirit of preserving and renewing the strength of GM, Ford and Chrysler?

Yes, count on it.

Will they bend far enough and fast enough, or will the companies die slowly because the help was too little too late?

Aye, that's a key question, along with this one: Will they be creative enough to frame a deal that gives the companies a major competitive boost without looking too much like a sellout to the workers who must ratify it?

I thought about how tough those challenges are as I listened Friday to Gettelfinger say the mid-contract health care changes at GM and Ford "were the most painful decisions I've made, having to look retirees in the eyes" when their benefits were cut.

Inevitably, there will be more pain and sacrifice along the way to getting these companies fixed and battle-ready for the future.

Let's hope everyone has the stomach for it.

Contact TOM WALSH at 313-223-4430 or twalsh@freepress.com.

Posted on Sunday, January 20, 2008 - 8:28 pm:

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I guess the same incentive that Honda does?