Help Wanted? Detroit?

February 19, 2008
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Spend some time in Detroit and you’re bound to see a lot of “For Sale” signs. What you don’t see are many that read, “Help Wanted.” Not with the headlines filled with word of the latest layoffs and buyout offers.

But could things be ready to turn around? Just possibly, it seems.

As part of the new contracts between the United Auto Workers Union and the Big Three, the automakers have the right to not only cut way back on their high-cost U.S. workforce, but to replace many of those hourly employees with workers earning half as much. Suddenly, things start looking competitive again.

According to General Motors Vice Chairman Bob Lutz, the new contract brings labor costs down nearly to par with the likes of Toyota’s super-efficient “transplant” assembly lines. Better yet, it may now be possible to produce low-cost auto parts and components as efficiently as low-wage nations like Mexico, or even China, reports the Detroit Free Press.

“We are looking at every single part and every single plant and every single product,” the paper quotes Ford executive Joel Hinrichs, who suggests that Ford is giving serious consideration to insourcing – bringing back production of parts that had been farmed out to suppliers.

Ford isn't alone. The same strategy is being considered by GM and Chrysler -- and pushed by the UAW, the quid pro quo for the huge concessions the union accepted, last summer.

That could be good news in Detroit, which has seen nothing but cutbacks, in recent years. At least for the Big Three, anyway. The situation could be a lot tougher for suppliers, who have reaped the benefits of outsourcing. Dozens of automotive parts makers are already in bankruptcy, so industry sources tell that the new development could push even more off the edge.

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