Negotiators for the United Automobile Workers, General Motors Corporation, and Ford Motor Company have only six weeks to make some of the most difficult decisions they have ever faced. Talks began this week for new contracts covering the 400,000 hourly workers at GM and 105,000 union employees at Ford.
While it is hard to predict the outcome, many observers believe there is a better-than-even chance of a strike when the current agreements expire Sept. 14.
But because both the union and management agree that certain key issues need to be dealt with, they could reach a compromise bringing significant changes in the employment system of the ``big 2'' without a confrontation.
``We're going to have a very difficult time, not because we're angry at each other, but because we're faced with a grave problem,'' says Al Warren, a vice-president and head of labor relations for GM.
The problem is that the automotive job market in the United States could shrink rapidly. GM's declining market share has led the nation's largest carmaker to trim its production base.
Eleven body and assembly plants will close over the next three years, idling more than 30,000 workers.
On top of that, with the increase in foreign and domestic competition, the ``big 3'' (including Chrysler) have moved ahead with outsourcing, a process in which parts and components are purchased from outside suppliers.
The parts are often made in countries with low labor rates, such as South Korea, Mexico, Brazil, and Taiwan. Outsourcing may result in a domestic factory being closed or scaled back.
Ford has already turned to Mexico and South Korea for its newest small cars. General Motors says it will likely close a score of component factories, turning instead to outside suppliers.
``Job security is our No. 1 priority,'' UAW president Owen Bieber has said repeatedly in recent weeks.
His counterparts on the company side of the bargaining table do not necessarily dispute that. ``It's in our interest to keep our plants open,'' says Peter Pestillo, head of labor relations for Ford.
But Mr. Pestillo and Mr. Warren say the only way their companies can guarantee jobs is if the union helps ensure their ability to remain competitive. That, they argue, rules out the UAW's second priority, a 3 percent guaranteed annual wage hike, and will require the union to make changes to give the companies more flexibility in their use of workers.