Goodbye, USA?

According to London's Guardian/Observer newspaper, Ford and GM are threatening to pull the plug on all remaining US factories unless the UAW agrees to what would essentially be a 30% pay cut. Reportedly, the automakers are looking to reduce the hourly cost per vehicle from $71.00 per hour to $50.00 per hour. From looking at the article, I'm under the vague impression that hourly pay rates may remain roughly unchanged while employee benefits may be pared considerably. Or, I could be wrong. Regardless, any cuts of this magnitude would be enormous.

I'm also unsure what would be involved as far as "....[the auto companies planning to] move their North American operations to countries in Latin America and Asia where manufacturing costs are cheaper." I can't imagine the triumvirate of Wagoner, Nardelli and Mulally moving their executive offices to China, but nothing surprises me at this point. About a year ago I predicted (I admit somewhat sarcastically) that there would be nothing left of GM in the US except Rick Wagoner, his administrative assistant and a receptionist. Not too many weeks ago I was predicting that some of our country's most iconic companies would move completely overseas. I was somewhat predicting that first company to be Microsoft, but any of the Big 3 could make the move instead. Far-fetched? I sure hope so. I'm hoping someone emails me this blog post 10 years from now and tells me what I an absolute idiot I was for even coming up with the idea.

I know you are all intelligent readers, but I'll point out the obvious anyway. Don't think in any way that the auto company ailments are limited to the city of Detroit. Already, Japanese auto plants here in the US are reviewing their pay structures to bring wages in alignment with lower local prevailing wages rather than with UAW rates. (I unfortunately could not find the February 8, 2007 Detroit Free Press articles or the Toyota memo .PDF file online that describes this situation. Please contact me at carriesnation at that certain hotmail address if you would like more information.)

Lower wages for UAW members will mean lower wages for the rest of us. If the Big 3 decide to up and leave the country, Detroit autoworkers (including finance and IT professionals in addition to the blue collar workers) will be flooding the country looking for employment, further driving down wages. Already, "The median price of homes in the US is expected to fall for the first time since federal housing agencies began keeping statistics in 1950." I have no doubt that Detroit's dubious distinction of having the "...metro-area with the highest metro foreclosure rate" contributed to that forecast.

(This article is cross-posted at http://carriesnation.blogspot.com)