But there is clearly much more work to be done in union negotiations and the vehicles Detroit is selling. In North America last year, GM lost $1,436 a vehicle, Chrysler lost $1,072 per car, and Ford bled a staggering $5,234 per vehicle in red ink, according to Harbour.
Retiree health-care costs remain a huge burden: Paying those benefits for thousands of retired American auto workers amounts to a handicap of at least $1,500 per vehicle.
Sales, Prices, and Capacity
There are other serious problems. A big one, says Harbour, is the fact that Detroit's carmakers just don't sell enough vehicles to keep their plants running at full capacity. When sales fall short of production, the Big Three pay union workers most of the wages and have other fixed costs associated with the factories.
Winning Concessions from Unions
Another cost issue is nonassembly labor. Harbour says that the Japanese plants in the U.S. use cheaper contract labor for most tasks not related to building a car, such as janitorial maintenance. Even though the domestic manufacturers have gotten the UAW to agree to outsourcing of such work, some jobs are still done with the higher cost of union wages and benefits.
The paid furlough clause, known as the JOBS bank, may be cut significantly. The Big Three will try to limit how long a worker can remain on paid layoff, says one union official who asked not to be named. If Detroit can reduce the JOBS bank benefit, automakers may cut even more jobs and close more factories. Says Harbour: "To be more competitive, the UAW has to accept fewer jobs."
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