CAW president: Labor concessions won't save Big Three

Canadian Auto Workers president Buzz Hargrove told a group of automotive investors on August 6 that the current focus by the Big Three on labor concessions is futile and won't help the overall picture of the North American producers.

"Labor concessions cannot possibly have any meaningful effect on the Big Three's market share in their home market," said Hargrove 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 (United Auto Workers), that would reduce the average production costs of a vehicle they sell in North America by only $500. This is equal to less than 2 percent of the average selling price of a new vehicle in the U.S. and one-sixth the current sales incentives which the Big Three are currently using 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 and less than one-quarter of Toyota's current per-vehicle profit margin on North American sales."

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