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Labor Pact Promotes Peace If Not Prosperity

What will the lay of the land be the next time the Big 3 and the UAW sit down to negotiate a new labor contract? Whether it’s prosperity or doom and gloom, the contract talks speedily and peacefully concluded in September strongly suggest an enlightened new era in labor relations may be upon us.

Many thought it would be a fire storm with so many inertia laden issues such as billowing health care and pension benefits and Big 3 overcapacity overhanging the talks.

These forces were threatening the domestics to the point where both sides knew some progress simply had to be made and that served to defang the militancy and bullheadedness that have characterized negotiations heretofore. Talks were devoid of saber rattling and that “go for the throat” rancor of old. As has been said, men of integrity rose above the level of moral squalor.

The need for domestics to become more competitive with the overseas-based domestic assemblers was in the play book on both sides of the table. A contract was forged that speaks to cooperation and increasing labor relations harmony.

While not the ultimate competitive leveler, the new contact creates some wiggle room for reducing overcapacity, spinning off some unprofitable component operations and it also established a two-tier wage system at Delphi and Visteon wherein new workers are hired at lower wages. Some real progress was also made on the pension benefit front ¨C no doubt less than hoped for.

Medical and pension costs remain as the Siamese albatross around the neck of the domestic Big 3.

At the recent Management Briefing Seminar in Traverse City, Mich., Governor Jennifer Granholm made a crisp and impassioned plea for the automotive industry to keep and create jobs for the state.

Great piece of oratory, really, but during a later session, a question about “lowest world cost” components was asked of the panel of industry executives, would they move manufacturing to other parts of the world to accomplish that? If necessary, of course they would. The answer was unanimous among panelists.

But the answer was also in the context of ongoing labor negotiations with the very real possibilities of no tangible progress with the new contract and perhaps even a bitter strike that could derail a fragile recovery. Not that the answer would change now, but at the margin for specific operations it could and can because there truly is some good news here. It is not the great leveler, but it is a mood swinger and a momentum changer.

Labor and management want to work together. That’s clear. It follows the proven theorem that if you treat people as if they were what they ought to be, then you enable them to become what they are capable of being. There is hope.

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