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Published: Wednesday, 9/26/2007

Strike against reality

IF IT LASTS more than a short while, the walkout by 73,000 United Auto Workers union employees at General Motors Corp. plants in Toledo and around the country could well turn out to be a futile strike against the new reality of the auto industry.

The truth is that neither side will win - not a weakened UAW, which doesn't carry the labor clout it once did, and surely not a weakened GM, whose so-far promising attempts at restructuring its North American car-making operations would be jeopardized by a lengthy strike.

The reality is that while GM workers are on the picket lines, assembly lines are humming in places like the nonunion Honda plant in Marysville, Ohio; the Mazda plant in Flat Rock, Mich., and - more to the point - at the unionized Jeep plant in Toledo, where a number of hot-button issues like differential pay already have been negotiated.

In GM's case, solutions are needed on far more expensive issues, especially what to do about $50 billion in future health-care expenses for retirees. Along with pension obligations, these "legacy costs" are said to add at least $1,600 per vehicle to the sticker price of GM-made vehicles compared to those of foreign manufacturers.

As the Economist pointed out, this labor gap costs GM the equivalent of four new model programs a year, leaving the company behind in product development that is vital to its future.

While the UAW and GM reportedly aren't far apart on transferring responsibility for funding health care for union employees and retirees to the union, the issue the company can no longer afford to back down on is job security.

Gone are the days when GM can guarantee pay for workers when they aren't working - the so-called jobs bank, for example - and still hope to compete successfully in the world auto marketplace.

GM no longer has the market power to pay the costs of ever-higher wages and benefits simply by raising its prices. These days, a price increase is most likely to push a prospective buyer into the showroom of a foreign nameplate competitor.

And while it would be catastrophic to the American economy, it is not unrealistic to visualize the day, in the not-too-distant future, when GM simply collapses under the weight of these competitive pressures.

GM is the world's largest auto maker, but it has lost some $12 billion in its domestic operations over the past two years, despite favorable moves toward restructuring in North America. So painful is the prospect of bankruptcy that almost no one cares to mention it, but the possibility remains if losses continue.

The UAW, meanwhile, has lost a remarkable 80 percent of its membership since its last national walkout against GM in 1970 and is a faint shadow of the impregnable labor juggernaut it was.

The UAW may have salted away an $800 million strike fund but it is unlikely that either the company or the union can economically sustain a lengthy work stoppage.

We recognize that gains in past UAW contracts have given GM workers a measure of economic security that has benefited the Toledo community, but the day of reckoning has arrived. The only assurance of employment workers will have is if GM can build a better product at a competitive price, one the auto-conscious American public wants to buy in big numbers.

There is no job security in bankruptcy.



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