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Automakers seeking labor cost cuts

Thu., June 14, 2007

DETROIT – General Motors, Ford and Chrysler will seek labor cost reductions that put them on par with their Asian rivals during summer contract talks with the United Auto Workers, officials of the three automakers said Wednesday.

Ford Motor Co. and Chrysler Group officials, who asked not to be identified because of the sensitive nature of the talks, told the Associated Press of their plans to secure concessions on wages that have left them at a competitive disadvantage.

A General Motors Corp. spokesman said the company wants to reduce costs to the level of the Japanese automakers such as Toyota Motor Corp.

“We know there are competitive gaps,” GM spokesman Dan Flores said Wednesday. “We benchmark Toyota in a variety of areas of the business.”

Detroit News columnist Daniel Howes, citing people familiar with Ford’s bargaining strategy, reported earlier Wednesday that Ford would seek to cut hourly labor costs by 30 percent, from about $71 to around $50, including wages, pension and health care.

The costs then would be comparable to Asian automakers, who pay similar wages but have far lower pension and health care costs and make thousands of dollars more per vehicle than the three Detroit automakers do.

GM and the UAW have worked together to cut health care costs and reduce the company’s hourly work force by more than 34,000 in the past year through buyout and early retirement offers.

“However, more change is required to structure GM for sustained profitability and growth,” Flores said.

UAW spokesman Roger Kerson would not comment Wednesday, but union President Ron Gettelfinger said in March that it made major health care concessions in 2005 to Ford and GM that saved the companies billions, and he implied that the union wasn’t willing to give more. The UAW has completed an evaluation of Chrysler’s finances but won’t say whether it will give Chrysler the same deal.

“We addressed health care in ‘05. You don’t get two bites of the apple, do you?” he said.

GM shares rose 39 cents to $31.82 in midday trading, while Ford gained 21 cents to $8.53 and Chrysler parent DaimlerChrysler AG’s U.S. shares rose 71 cents to $88.55. Toyota’s U.S. shares rose 94 cents to $123.28.


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