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No Holds Barred

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May 14, 2006


No Holds Barred

Both sides in the labor battle at America's largest auto parts supplier, Delphi, are trying to ratchet up the pressure. Delphi's management asked a bankruptcy judge to throw out its labor agreements, which would let the company cut wages and benefits steeply. The United Automobile Workers leadership, meanwhile, has asked its 24,000 rank-and-file union members at Delphi to authorize a strike.

The country is used to confrontations between entrenched unions and struggling corporations in the Rust Belt, but this one is more significant than the usual fights over who will pay for health benefits and job security. The choices being forced on the Delphi workers are extreme, and the temptation for management to simply pack up and move overseas is powerful. This struggle exemplifies wrenching changes in our economy that everyone watches with concern and more than a little trepidation.

The problems at Delphi and its former corporate parent, General Motors, are not exceptional but are instead symptomatic of the challenges faced by a high-wage economy competing not only with drastically lower wages but also increasing productivity and quality overseas. These days, white-collar workers are no more immune to the offshoring of their jobs than their assembly-line counterparts. Even far from Michigan, this is everyone's problem.

A negotiated settlement should be possible because G.M., Delphi and the U.A.W. all know that a strike would be the worst outcome, potentially crippling both of the businesses and costing workers and retirees more than the wage and benefit concessions they are being asked to accept.

But Delphi management, led by the company's chief executive, Robert Miller, has spoken indecorously at times, antagonizing workers unnecessarily. Proud men and women, backed into a corner, may prefer to go down fighting in a strike to accepting an offer they deem humiliating, no matter what leadership tells them. Yet workers have proved themselves willing to join constructively with the auto companies when they know the businesses are in danger and the pain will be shared.

There is still money to be made manufacturing cars and parts in America. One need look no further than the big investments Toyota and Hyundai are making here. We hope American business proves sharp enough to figure out how to do it too.

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Toyota and Hyundai are only going to do just enough to avoid a political backlash. For that, I will give them credit. The early '80s Buy AMerican backlash won't work now because Japan INc. shrewdly positioned themselves to where they can convince the sheeple that they are American, too.

I hope the UAW and Delphi/GM both realize they have a golden opportunity here to turn a corner in worker relations. The very future of the North American auto industry depends on the outcome of this confrontation. I hope that Miller understands these people simply cannot take a 50% pay cut without losing their homes, and I hope the UAW understands that Delphi simply can't continue paying them $40 an hour, or whatever it is up to these days with benefits.

Somewhere in the middle lays the foundation of a new day in the auto industry; one where GM and Ford can get back to the business of building great cars and trucks without WallStreet calling the shots.

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