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UAW Faces Revolt Over Two-Tier Wages

A symbol of union’s decline.

by on Aug.16, 2011

GM says the two-tier wage system lit shift production of the the Chevy Sonic to the U.S., but workers say they aren't getting a "living wage."

The United Auto Workers top leadership is facing a potential rebellion over the issue of the two-tier wage system approved for Detroit automakers, which has become a potent symbol of the union’s steady decline.

The two-tier wages were initially approved by the UAW in some contracts signed in the late 1990s but only entered the union’s critical contracts with General Motors, Ford and Chrysler in 2003.  The scope of the second-tier wage program was dramatically expanded in 2007 when union negotiators accepted the rationale promoted first by GM than by Chrysler that it would permit the companies to hire new workers and become more competitive against Japanese transplants.

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The acceptance of the two-tier wage agreement four years ago also represented the tacit acknowledgement by union negotiators of the downward pressure asserted by non-union transplants in the Southeast. Some of the newest plants — such as the Volkswagen facility in Chattanooga, Tennessee that opened this year – are paying barely $15 in combined wages and benefits, fraction of what workers earn in Detroit.

Detroit’s Big Three say they need to match those lowerlabor costs to be competitive — but domestic workers insisting they’re not getting a “living wage,” and could make it difficult to negotiate new contracts in the weeks ahead.


Detroit, Korean Makers Are Likely Winners as Car Sales Rebound

New study also warns that small car sales may be limited by America’s obesity epidemic.

by on May.17, 2011

Products like the Ford Focus could pick up share from Japanese makers as the American market recovers, says a new study.

Despite the shortages facing Japanese automakers like Toyota and Nissan, the U.S. new car market appears poised to experience steady sales growth after one of the worst downturns since the Great Depression.

But this rising tide, at least, won’t float all boats equally, cautions research firm A.T. Kearney.  It  predicts 13.2 million new autos will be sold in the U.S. this year, a roughly 50% increase from the depths of the 2009 downturn.  But as many as two points of market share once controlled by the Japanese carmakers could be up for grabs in the next few months – with Detroit and Korean makers in a good position to benefit at the expense of their struggling rivals.

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A variety of factors, including fuel prices, could impact the pace of the recovery, while also determining the sort of vehicles American motorists consider, the study indicates.  But those who expect a big gain for small car sales could come up short, Kearney analysts warn, pointing to America’s obesity epidemic.


GM To Idle Plants for 9 Weeks

Automaker to cut 170,000 units of production.

by on Apr.23, 2009

The 9 week shutdown will reduce production by 170,000 cars, trucks and crossovers, and impact 55,000 U.S. workers.

The 9 week shutdown will reduce production by 170,000 cars, trucks and crossovers, and impact 55,000 U.S. workers.

There’s a mystery to the news of the morning.  What is so far known is that General Motors, facing the immediate threat of bankruptcy, and the more extended problems caused by the massive slump in car sales, plans to idle the majority of its U.S. assembly plants, over the summer, for as much as nine weeks.

The downtime would eliminate about 170,000 cars, trucks and crossovers from its already bulging inventory.  What we don’t know, yet, is which plants are to be idled, but that the automaker is expected to reveal that by the end of this week.

The move is the latest in a series of setbacks for the giant automaker, which has barely five weeks left to convince the White House it deserves an additional bailout.  As if to underscore that situation, GM officials are telling bondholders they won’t receive an expected $1 billion debt payment that was due on June 1st.  Whether this will help convince reluctant lenders to move ahead on a demand to exchange $28 billion in debt for equity is uncertain, but it certainly gets the message across.


America “Cannot Walk Away” From Auto Industry

President’s speech signals a new direction.

by on Feb.25, 2009

"The nation cannot walk away" from the auto industry.

"The nation cannot walk away" from an auto industry "millions of jobs depend on."

“The nation that invented the automobile cannot walk away from it,” declared President Barack Obama, during a speech to the joint houses of Congress, Tuesday night.

The 52-minute address, effectively the new President’s first State of the Union, covered a broad range of topics, from the nation’s economic crisis, to the war in Iraq, from health care to education. But a fair share of the President’s comments were devoted to the ailing American auto industry and the energy policies that could shape the future of transportation.

Noting that “millions of jobs depend on it,” President Obama said that, “We are committed to the goal of a retooled, reimagined auto industry that can compete and win.” That was undoubtedly good news to Detroit’s troubled Big Three automakers. But other comments were also aimed at chastening the executives who oversaw the domestic industry’s desperate slide.

“As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink,” said the President. “We should not, and will not, protect them from their own bad practices.”


Auto Politburo Members Drive Imports

Will Task Force be biased in judging bailout bid?

by on Feb.23, 2009

Import bias? Sec. Geithner owns 2008 Acura TSX, like this one.

Import bias? Sec. Geithner owns 2008 Acura TSX, like this one.

U.S. Treasury Secretary Timothy Geithner drives a 2008 Acura TSX. Lawrence Summers, the Director of the White House National Economic Council, drives a 1995 Mazda Protégé.

Does that matter? It might, suggests a story in today’s Detroit News. The report reveals that among the eight members named last Friday to the new Presidential Task Force on the Auto Industry – along with their 10 senior policy aides – only two own cars made by the Big Three. As reporter David Shepardson notes, that number jumps to three if you include the Treasury Department’s special advisor to the task force.

Does that suggest that these folks already have an import bias? Detroit’s Big Three better hope not, especially General Motors and Chrysler, who have already received billions of dollars in federal loans and are asking for billions more in aid they say they critically need if they’re to survive the current economic downturn.


Ghosn to Announce New Belt-Tightening

Japanese, following Detroit’s lead by cinching belt, slashing jobs.

by on Feb.05, 2009

Tighten that belt: Nissan CEO Ghosn

Tighten that belt: Nissan CEO Ghosn

Though Japanese makers suffered a smaller decline in January sales than their Big Three rivals, they’re still feeling the impact of the collapsing economy – and struggling to stay ahead of the situation by slashing costs and, as needed, eliminating jobs. It doesn’t help that the Asian makers are undergoing a sales crisis in their home market, as first reported, on Tuesday.

Major cost-cutting is expected to come from across the Japanese industry, with Nissan scheduled to reveal its own moves, as early as next week.

In the U.S., belt-tightening is occurring at every level, from minor steps like delaying orders for new business cards, all the way up to extended plant shutdowns. Toyota is planning a first-ever “voluntary” round of job cuts that could impact 100s, perhaps 1000 or more workers. Meanwhile, Nissan is restructuring sales and marketing field operations, as well as realigning its U.S. design centers. The much-ballyhooed styling center, in Farmington Hills, MI, will be consolidated into another design operation, in California. All told, 110 jobs will be lost, in the process.

Sources tell TheDetroitBureau that more big cuts are coming, at Nissan, though for now, they’re declining to provide many details. The corporate priority, said a well-placed Japanese executive, is to trim unnecessary spending to focus on core activities, especially product development, as well as basic, day-to-day operations.

“We don’t want to have to cut up the furniture into firewood to stay warm,” said the source, admitting that was a bit of an exaggeration, but nonetheless indicative of the watchful approach taken by Nissan’s CEO Carlos Ghosn.

Ghosn, who serves double-duty as chief executive of Nissan’s French alliance partner, Renault, will meet with the Japanese maker’s employees, in Tokyo, on Monday, February 9th, to provide a better sense of the company’s financial situation, and to outline the cost-cutting plan. Details, sources say, will be released at the same time the carmaker announces its third-quarter financial results. (Nissan, like much of Japan’s businesses, operates on a fiscal year calendar, which ends March 31.)