A top economist who watches the auto industry predicted Tuesday that the United Auto Workers union will not go on strike against any automaker this year.
But just a few months before negotiations are set to begin on a national master contract, Center for Automotive Research Chief Economist Sean McAlinden said the Detroit Three must gain parity on wages and benefits with their Asian competitors in order to survive.
“That general agreement must match the transplant wage and benefit costs,” McAlinden said during a presentation to auto executives on the future of labor relations in the industry.
The Detroit Three — General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group — pay hourly workers about $65 per hour including wages, health care costs and pension benefits, McAlinden said.
At Honda Motor Co.’s U.S. plants, workers are paid about $40 per hour including benefits, he said.
The disparity drives up the cost of the Detroit Three’s products, so they make far less money per vehicle than Honda or Toyota Motor Corp., McAlinden said.
While McAlinden predicted a general strike will not happen this year, he said wildcat strikes at key plants are possible.
A message seeking comment was left Tuesday with a UAW spokesman.
McAlinden said the UAW’s core values of providing a middle-class standard of living, getting the best health care deal in heavy manufacturing, equal representation for all workers and uniting people for political activism all are at risk in the contract talks, set to begin in June. The UAW’s master contract with the automakers expires in September.
Ford, which McAlinden said is in the worst shape of the three, likely will seek deeper concessions — even temporary labor cost cuts of up to 20 percent as it tries to return to profitability. A 20 percent cut would save Ford $2 billion a year, he said.
Ford lost $12.7 billion last year and has mortgaged its factories to get a credit line of up to $23.4 billion. But McAlinden predicted that Ford may burn up more than the $17 billion in cash it expects to use before returning to profitability in 2009.
“Something will have to be done” about its labor costs, he said.
The three companies also are likely to bargain for a lower-tier wage for new hires and to set wages by region rather than one national contract, he said.
The traditional “pattern” agreement reached with one automaker and then imposed upon the others is in jeopardy as well, due to declining market share and sales by the Detroit Three, McAlinden said.
He also predicted another round of restructuring by GM in 2010 with more employee buyouts and early retirements. Last year, more than 34,000 production workers took the company’s offers to leave.