Speaking of labor talks, it's coming down to crunch time.
Chrysler Corp.'s $1 billion second-quarter profit will reinforce conventional wisdom that it will be the target. An announcement from Solidarity House is expected on Aug. 22.
But not so fast. Don't be surprised if the UAW chooses Ford Motor Co., which is now making big-time profits again ($2.6 billion in the first half), to help it sculpt the framework of a new pact.
Here's why:
Outsourcing is the key issue. Chrysler already has gone outside as much as it needs to, and it is actually bringing engine and transmission work inside that was previously built by Mitsubishi Motors Corp.
General Motors Corp.'s Delphi Automotive Systems, while very profitable, is still trying to sell all or part of four interior trim plants. Other marginal plants could be closed or sold if the UAW refuses to give Delphi a lower wage and benefit package than it gives the rest of GM.
Ford is somewhere in the middle. It would like the freedom to choose any supplier at any time. But it could probably accept some language aimed at limiting wholesale shifting of its internal parts sourcing.
Targeting Ford is based on the assumption that going to Chrysler first might produce an agreement so favorable to the UAW that GM could not accept it, thus raising the risk of a costly strike. Ford could agree to outsourcing limits that might add to GM's costs, but would leave some room for compromise between the UAW and Delphi.
What makes the GM-Delphi dilemma even more complicated is that the 1993 agreement covered about 12,000 workers whose former GM-owned component plants were sold to either American Axle & Manufacturing Inc., Delco Remy America Inc. or ITT Corp. After the UAW settles with GM this fall, it will then negotiate separate agreements with those three companies. Will those new owners get a lower-wage or more flexible agreement than the Big Three? If so, will that strengthen Delphi's resolve to shed its underperforming factories?
There's a very real fear that if the union can't give Delphi a lower-wage structure, it will simply close more U.S. plants or sell them to buyers who don't have any union presence. Or GM could simply spin off Delphi as a separate company with own class of stock, a prospect industry observers have been expecting for several years.
Yes, there will be tense moments, but in the end look for a settlement, even at GM, without a strike.
Here's why:
* The North American market remains strong, even if a red-hot first-half sales pace cools somewhat this fall.
* GM is launching six new car models and its completely re-engineered lineup of front-wheel drive minivans in the next six months. Keeping those changeovers on schedule is absolutely essential.
* Ford is introducing its Expedition sport/utility, giving GM competition in a highly profitable segment.
* A national strike, in which 225,000 GM employees draw benefits from the UAW's $700 million strike fund, will cost far more than last spring's strike when it paid benefits to about 3,000 members at the Dayton parts plants.
* Privately, UAW officials acknowledge that the only way to contain outsourcing is to become more effective at organizing non-union parts plants in the southeastern U.S.
