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How did the labor cost for the big 3 get so high? Simple. Years ago, the UAW targeted one automaker for its negotiations strategy. Lots of contentious bargaining, bad employee morale, and, frequently, a strike. When the dust settled, the automaker eventually caved in and the settlement applied to the other 2 automakers. Then the automakers finally realized that as they marked up their labor costs by their margin factor, say 20%, they make $.20/hour for every $1/hour they gave across the bargaining table. Hey, why have strikes and unrest?...instead of trying to settle for $3/hour and its $.60 mark-up, let the UAW have $4/hour increase it demands and we get $.80/hour plus no strikes and a bonus of employee happiness. Just keep the competition out - Buy American! Now, fast forward to 2007, and read the UAW report on the GM settlement (with "unprecedented product and investment commitments"), including Highlights at http://www.uaw.org/contracts/07/gm/index.php. Thirteen months later, the taxpayers are being asked to subsidize the industry.
Meanwhile, the average U.S. CEOs and executive compensation is about 425 times more than the average worker's wage. We all know that the Japanese labor costs are less and their executives make about 50 times the average workers pay. Who is fooling who? Best Regards, Ed
 
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