UAW, GM Deal Highlights Global Labor Woes

U.S. automakers and their workers are looking to the future, as evidenced by a new deal between General Motors and the United Auto Workers. New York Times columnist Joe Nocera and Scott Simon discuss developments.

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SCOTT SIMON, host:

US auto manufacturers and the United Auto Workers are bracing for leaner times still. This week, General Motors and the leadership of the UAW reached a tentative deal to cut health-care benefits for hourly workers and retirees. This deal would save GM as much as $3 billion a year for hourly workers and cut retiree benefits by 25 percent. The union and the company hope that it will also save jobs for auto workers. The Ford Motor Company and the Chrysler Group will likely seek similar deals. Ford also told shareholders this week to expect more plant closures. As American car sales struggle in the global market, both manufacturers and labor seem to be in the fight of their lives and no one is watching that fight more closely than other unions for both skilled and unskilled workers who are also feeling the pinch of globalization. Our friend from the world of business, Joe Nocera, columnist for The New York Times, joins us from WFCR in Amherst.

Joe, thanks for being with us.

Mr. JOE NOCERA (The New York Times): Thanks for having me, Scott.

SIMON: Apparently GM threw open its books for the auto workers to take a look, and the Auto Workers Union was impressed by how desperate the financial straits are.

Mr. NOCERA: Well, it is a lousy situation. What General Motors has is a lot of cash right now, but what it doesn't have is profitable cars. I mean, GM has basically been saying for years that something like $1,500 of the cost of every car is health care for retirees and they are fundamentally losing money on every single car they sell in the United States, and the only way they make a profit at all, which they're not right now, is through their finance operation. GM is in this desperate position to try and hold on to its 25 percent market share, which I personally think is a mistake, and the result is it is getting into a deeper and deeper and deeper financial hole and it can't compete with the likes of Toyota and Honda, and that's the ugly truth.

SIMON: Well, let me get you to talk about Toyota a bit because it's widely considered the best-run auto maker in the world today and they don't have union labor.

Mr. NOCERA: Well, that's right. That's including the plants in the United States. They have certain...

SIMON: They open in right-to-work states.

Mr. NOCERA: That's right. So there are several points to be made about that. Yes, they don't have union labor. They also don't have what they call in the trade the legacy health-care costs. They don't have to pay out health care for many, many thousands of retirees as General Motors does. So they have these financial advantages. On the other hand, the workers in a Toyota plant actually do get paid pretty well. They have pretty decent health benefits. And the real secret sauce for Toyota has less to do with the pay than with the efficiency of the production line--excuse me--the assembly line. Their incredible capacity for keeping their workers, you know, happy and they rotate workers around from job to job, they solicit input from workers on how to make the shifts work better. They do a lot of things that keep workers happy, and so you don't have a factory full of alienated labor. That actually really does make a difference and it's part of why Toyota has been so successful. They also, by the way, make very good cars.

SIMON: Yeah. Is the cycle we're talking about in any way influenced by the influence of a company like Wal-Mart?

Mr. NOCERA: Wal-Mart is a company that has been built on non-union labor. They employ--you know, they're the largest employer in the United States. They pay above the minimum wage but not that much above. Their benefits are terrible, if they exist at all, and the company itself fights unions to the death because to not do so is to lose their competitive advantage. And so what you have is downward pressure being placed on the industrial unions by the problems facing autos and steel and airplanes, and you have this other pressure among the service workers to stay non-unionized by companies who view the fact that they don't have unions as a really important part of their business model.

In this squeeze between the service workers and the industrial workers, people are actually raising questions as to whether the middle class is gradually being eliminated in this country.

SIMON: Joe, thank you very much.

Mr. NOCERA: Thanks a lot, Scott.

SIMON: Joe Nocera, columnist for The New York Times, speaking with us from Amherst, Massachusetts.

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