UAW, automakers to negotiate over labor gap

On the bargaining table is the domestic companies' desire to reduce or get rid of that giant obligation, perhaps by funding a UAW-run trust that would pay retiree health care bills.

Still, the domestic automakers have a lot they can do to become more efficient to reduce costs and close the profit gap with the Japanese automakers, Harbour-Felax said.

Among the inefficiencies, which all three say they are working to reduce, is the lack of standardized parts globally. Ford, GM and Chrysler have multiple parts that are unique to one model, while Toyota and Honda have standardized parts for nearly all models.

The Detroit Three also are less efficient because they don't build as many cars on shared underpinnings, nor do they design and engineer as many models for sale globally, she said.

"When the union says we're not all the problem here, there is a lot of validity to that," Harbour-Felax said.

At a glance THE ISSUE: Bargainers for the United Auto Workers union and the Detroit Three automakers are working to reach a new contract, and the cost of labor is a key focus for the auto companies. THE COSTS: By most accounts, labor expenses for General Motors Corp., Ford Motor Co. and Chrysler LLC amount to about 10 percent of the price of a new vehicle, including wages, benefits and "legacy" costs for retiree pensions and health care. THE TALKS: The companies want to erase a roughly $25 per hour labor cost gap with their Japanese competitors. But the union likely will focus the contract talks on the nonlabor costs of building cars and trucks, much of which is controlled by the companies.

Greg Gardner, an analyst for Harbour Consulting, a Troy company that tracks manufacturing productivity, said the companies are focusing on labor costs because they can be measured and controlled.

The UAW, he said, has rules that prevent workers from doing multiple jobs, although it is reaching agreements plant-by-plant to become more flexible. Workers already do multiple tasks for the Japanese companies.

The Detroit Three, though, often price their vehicles so they make less money than the Japanese automakers, many times to preserve market share, Gardner said. They also were caught off guard when gas prices rose and consumers shifted from trucks to cars.

The companies and the union won't talk about the negotiations now that they're under way.

But Cooksey says the union, which gave health care concessions to Ford and GM in 2005, shouldn't give up any more.

Patrick Hegedus, an electrician at the same Ford plant where Cooksey works, isn't so sure. He's happy to be employed in a battered Michigan economy and thinks there may be room for compromise.

"I know things are going to change and somebody's going to have to come to an agreement in the middle," said Hegedus, of Brooklyn, who has worked 13 years for Ford. "The more I think about it, the bigger headache I get."

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