This weekend sees the start of formal contract talks between Detroit’s ‘big three’ automakers and the United Auto Workers (UAW) union.

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Following handshakes and photos, Chrysler and UAW negotiators began talks on Friday. Similar discussions to start at General Motors and Ford on Monday.


Many industry observers consider the talks critical to the future of the Detroit-based ‘big three’ who need to bring their labour costs into line with Japanese rivals such as Toyota and Honda and reduce so-called ‘legacy costs’ – the health care and pensions provided not only for current workers but the legions of retirees.


Such costs – primarily labour by higher-paid workers on previously negotiated UAW contracts – add roughly $2,000 to the cost of the US producers’ vehicles compared with their Japanese rivals, according to US studies. The foreign-owned plants have mostly non-union labour in ‘greenfield’ factory sites in the southern US and, because they have only built cars in the US for about 25 years at most, do not have as many retired workers still drawing benefits.


UAW president Ron Gettelfinger reportedly has said the union was not in a concessionary mood ahead of the talks to renew contracts expiring with the automakers in September.

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However, the union has recently agreed to various buy-out and early retirement packages offered over the last couple of years as Ford, GM and Chrysler have closed older, less efficient car and parts plants.


The union has also agreed to wage cuts at key supplier Delphi as part of restructuring moves to bring the bankrupt supplier out of US Chapter 11 protection.


The Associated Press said on Friday that all three US automakers have said they would like to cut or eliminate a claimed $US25 to $30 per hour labour cost disparity compared with Japanese rivals.


All three lost a combined $15bn last year, the news agency noted.