Motor City: Rising From the Ashes or Reigniting the Fire?

Detroit is the home to what is dubbed “The Big Three” automakers.  Two of the big three, General Motors and Chrysler, received large bailouts and government assistance during the early stages of the still ongoing recession.  Ford was the only one of the Big Three that didn’t require federal assistance.

With the recent and surprisingly quick turnaround of Detroit’s auto industry as of late, many of the employees, who belong to the United Automobile Workers Union, are arguing with the carmakers over how profits should be divided.  The 110,000 UAW members would like to see more factories and jobs open up, while increasing pay that had undergone severe cutbacks as a result of the bailout.

In opposition, the Big Three automakers are hoping to stave off additional or increased costs of production in order to become more competitive with US factories that are foreign-owned and employ workers for much cheaper because they are non-union members.

As a stipulation of the bailout, the UAW agreed to a policy that disallows a strike at both General Motors and Chrysler.  Ford, however, has no such agreement which gives the UAW a little leverage in negotiations with the automakers, knowing that Ford could go on strike if the negotiation process falls apart.

The contention of the automakers is that even though profits reached roughly $6 billion combined in the first quarter of 2011, there needs to be significantly more profit growth in order to recover in the market, hire more employees and open back up more factories.

Both sides are aware of the fragile state of affairs that exists and how working out an agreement is in the best interest of everyone if it appears to be fair and reasonable for both sides.  Reaching a fair deal with have to involve concessions and compromise from the UAW and the Big Three though.