Keeping jobs in U.S. has a price

Inter Lake editorial

If you ever wondered why American manufacturing is heading offshore, you only need to study the "compromise" reached between General Motors and the United Auto Workers this week to end a strike.

The motives for the strike, in one sense, were entirely understandable. American auto workers are terrified that their jobs will disappear to China or other countries because GM and the other manufacturers can hire labor there at a much cheaper cost.

We sympathize with the desire to keep manufacturing jobs in the United States, but we also understand that companies like GM can only succeed if they can make a profit. Even the Detroit newspapers were hard-pressed to be enthusiastic about the strike. The Detroit News wrote an editorial titled "What's good for GM is good for the UAW," playing on the famous but now obsolete saying, "What's good for GM is good for the country."

The editorial noted the problem with UAW's decision to strike: "Despite having access to GM's financial statements and projections and having made some preliminary concessions in the last two years, the UAW still believes the work force is entitled to perks that no longer are sustainable in today's global economy."

The problem is that America's autoworkers, which the Detroit News called, "the best-paid factory workers in the world," are themselves the greatest impediment to a secure future for the automotive industry in America.

Because so many benefits have been locked in place for so long as the result of collective bargaining, Detroit is at a huge disadvantage in an increasingly competitive global market for automobiles. This week's strike highlighted the problems facing both workers and manufacturers, but there were no fundamental solutions reached.

Instead, GM has found a way to rid itself of an open-ended obligation to pay for health care for union retirees, but at a cost of $36 billion. That's how much the company has agreed to pay into a new UAW-run trust fund that will administer retiree health care. The union will invest the money and be responsible for future health care for about 340,000 hourly retirees and spouses.

Whew! That must be a load off GM's shoulder's.

In the meantime, however, it is a mere drop in the bucket in resolving what amounts to a $25-an-hour labor cost disparity between GM and its main Japanese competitors.

There is no easy solution to the problems that we as a country face when confronting a global economy and cheap labor overseas. Too often we think of lower wages as a sacrifice; they may instead be a necessity. American companies, meanwhile, need to demonstrate a commitment to America - our national security and continued growth could well depend on the decisions these companies make in the next few years.

At some point it may even require a change in national policy and intervention by an American president to force labor and manufacturers to recommit to each other and to retool old contracts so they are no longer mutual suicide pacts, but rather promises of prosperity.