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Automakers and Union Negotiate Workers Pay, Health Care

Three major U.S. automakers, including General Motors, are negotiating with United Auto Workers on wages, pension plans and health care. Analysts talk about what the industry hopes to achieve.

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    It was literally a stretch to shake hands for the cameras today, as talks between General Motors and the United Auto Workers union got underway in Detroit. The awkward ritual handshake underscored the challenges ahead for both sides, as the UAW, one of America's largest unions, begins talks with GM, Ford and Chrysler on labor contracts set to expire in September.

  • TOM LASORDA, CEO, Chrysler Group:

    Negotiations are difficult, and this one will be no exception. The challenges we're facing are clear.


    In 2006, the big three domestic auto makers lost a combined $15 billion, as Toyota and other overseas manufacturers continued to grow. At the same time, health care costs for employees and retirees have soared, and auto makers have closed plants, eliminating 70,000 jobs. Chrysler, Ford and GM are spending $100 billion on health care, most of it for retirees.

  • JULIUS COSEY, Chrysler Worker:

    Our biggest concern right now is if you're going to take any money away from us and how much we're going to lose in health benefits. So that's two of my biggest concerns.


    Meanwhile, the auto workers are struggling to preserve historically generous benefits at a time when coverage is shrinking in other industries.

    Joining me now to discuss what's at stake in these negotiations for the auto companies, the auto workers, and the rest of us are James Womack, founder and chairman of the Lean Enterprise Institute, a non-profit research organization. He has written extensively about the auto industry and management issues.

    And Harley Shaiken, a professor at the University of California at Berkley, he specializes in labor issues.

    So, Mr. Shaiken, I'll start with you. What is at stake for labor?

    HARLEY SHAIKEN, University of California, Berkeley: It's a defining moment for the industry and for labor. I think there's a key question here, which is, can we have competitive domestic auto makers in the global economy that also create middle-class jobs? That's pivotal for auto workers; it's pivotal for the UAW. It's critical for the companies, but it's also, I think, of importance to all Americans.

    Historically, this is an industry that has not only produced effectively, but also created a core of the middle class that resulted in some of the strongest economic growth in this country's history. So these are auto talks that begin today, but the impact of this, I think, affects the entire economy, really the country.


    Mr. Womack, are we talking survival here for the companies especially?

  • JAMES WOMACK, Lean Enterprise Institute:

    Well, the companies have got a cost burden that I think most anybody would say can't be pulled with the pulling power they've got, so they've got to do something. And the question really becomes, who's going to pay for the transition from an uncompetitive situation to a competitive situation? So, yes, they have to do something. This really is a defining moment; I think that's quite right.