Aug 7, 2007

CAW President says labour concessions won’t save the Big Three

Toronto, Ontario – Canadian Auto Workers Union (CAW) president Buzz Hargrove told a group of automotive investors that the current focus on labour concessions by the Big Three automakers is “futile” and won’t help the overall picture of the North American producers.

“Labour concessions cannot possibly have any meaningful effect on the Big Three’s market share in their home market,” Hargrove said, in a speech to the JP Morgan Automotive Investment Conference in Detroit. “Even if the Big Three get everything they are asking for from the UAW, that would reduce the average production costs of a vehicle they sell in North America by only $500.”

Hargrove said the amount is equal to less than two per cent of the average selling price of a new vehicle in the U.S.; one-sixth the current sales incentives currently used to sell new vehicles; and one-twentieth of what Toyota saves on the import of a Lexus, “due to the artificial suppression of the Japanese foreign exchange rate.”

Hargrove said all the focus on trying to extract labour concessions diverts attention from the North American industry’s real problems, which derive from falling market share of domestic producers, and which he says is the end result of a huge and growing automotive trade imbalance with the rest of the world.

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