Foreign Competition Forces US Autoworker Concessions

Peter Fedynsky
Voice of America
Washington, D.C.
June 16, 2006

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One of America's major labor organizations, the United Auto Workers, or UAW, held a convention this week amid signs that foreign competition will force the organization to accept benefit concessions.

Millions of Americans are fans of stock car races, which feature powerful vehicles that resemble the family sedan. Since the largest U.S. racing organization, NASCAR, was founded in the late 1940s, those stock cars have always been American.

Next year, for the first time, NASCAR races will include the Toyota Camry, a Japanese car built in America.

David Illingworth, Toyota’s senior vice president, said, "More than 6.5 million Camrys have been sold in the U.S. and it has been the best-selling car in America for eight of the last nine years."

Several Toyota models also have more American parts than vehicles built by the “Big-Three” American automakers -- Ford, General Motors and Chrysler -- or more precisely, Daimler-Chrysler, which is owned by American, European and other international investors. Some Fords, incidentally, are assembled in Mexico for distribution in the United States and the company has factories in China for sales in that country.

So, what is an American car? Bill Booher represents the Council on Competitiveness, a non-governmental organization in Washington, D.C. that seeks to advance the U.S. economy. "As the 21st century rolls in and the global economy gets smaller and smaller and smaller, defining vehicles as American or Japanese or European is a term that's not nearly as important as looking at where they are produced, what they mean to the overall economy," he said.

Foreign manufacturers in the United States employ tens of thousand of Americans in supply companies and newly built plants, particularly in the southeastern states. As foreign vehicles roll off assembly lines with non-union labor, domestic manufacturers close plants and lay off workers--most of them union members. At the same time, the total number of U.S. autoworkers has remained at 1.1 million over the last 10 years.

The trend toward non-organized labor has hurt the United Auto Workers union, or UAW, whose membership has plummeted from 1.5 million in the 1970s to about 640,000 today. UAW President Ron Gettelfinger spoke at the organization's convention in Las Vegas. "The point is that this union is no stranger to struggle, adversity and hard choices. Our road has never been straight and smooth,” he said. “It has plenty of twists and bumps. We've enjoyed our share of successes, but we've suffered setbacks too."

Until the onset of serious foreign competition in the 1980s, the UAW demanded and received generous health and pension benefits from U.S. auto companies. Today, General Motors alone is funding the pensions of one million former employees. Such payments, known as legacy costs, are adding more than $1,000 to the cost of every American vehicle.

The UAW is prepared to make concessions to help compete against foreign manufacturers, who do not carry such high labor costs. Booher says concessions are necessary. "That's a model I think you're going to be seeing in the future in the auto industry and other industries,” he said. “Maybe in the 20th century we were a cradle-to-grave society, but I think we're going to be asking all of our citizens in the future to take some responsibility for their own long-term financial and other benefits viability."

Others, including UAW president Ron Gettelfinger, are calling for a universal health care system. That, however, has been a controversial political issue for more than half a century and Congress does not appear likely to enact such a system in the near future.

Meanwhile, foreign competition has increased the efficiency of the American autoworker, who is producing more cars with better quality.