The Great Shrinking Labor Strike

[Omaha Steve]

http://www.usnews.com/blogs/flowchart/2007/10/11/the-great-shrinking-labor-strike.html

If the union walkout at General Motors lasted just two days, and the one at Chrysler wound down after a mere six hours, might Ford avoid a strike altogether?

Seemingly so. The work stoppages at GM and Chrysler were so brief that they barely disrupted production—and certainly had no impact on consumers or the economy. That's because both sides are wielding a paper club. Chrysler and GM both have so much unsold inventory of cars that for most models, it would have taken weeks for a strike to begin crimping supply. And with both companies in the midst of long market share declines, there are plenty of competitors ready to pick up the slack and take even more share the moment Detroit wobbles. Labor and management both knew that a prolonged strike would be crippling to them—but not to anybody else. So the Potemkin walkout allowed each side to flex a little flab and declare victory.

Ford is next—and if the company is lucky, its own labor negotiations will represent the ultimate anticlimax. Ford is in the worst shape of the Detroit Three, with executives saying publicly that it won't be profitable until at least 2009. That makes it the weakest target for the United Auto Workers, no doubt the reason they chose to negotiate with Ford last. With the Chrysler and GM deals essentially the same in terms of healthcare savings for the manufacturers and job protections for workers, the template is clear for a quick, clean deal between Ford and the union. "They'll move with relative speed," predicts analyst Mark Oline of Fitch Ratings. "Both sides will work diligently to avoid a strike." Negotiations, which have been ongoing for awhile, could conclude as early as next week.

Fresh union contracts at all three of the domestic automakers are an essential step toward reclaiming turf in an industry where foreign-based companies like Toyota, Nissan, Honda, and even Hyundai are calling the shots. Huge healthcare costs borne by the domestic automakers have put them at a severe disadvantage next to competitors that face a fraction of that burden. The new deal helps rein in those costs, by offloading some to the unions and establishing trust funds as a hedge against healthcare inflation. That's Step 1. Next, all of the Detroit Three have to stop their market share from shrinking further and introduce new cars that appeal to consumers.

FULL story at link.