Auto Industry's word of the year: "Transformational"

Posted by: David Kiley on June 22, 2007

Detroit’s Big Three have been saying for months that this year’s contract talks with the UAW have to be “transformational.” They can’t afford to have mere incremental cost reductions in heathcare and work rules.

What the companies are looking for is a workable agreement for the UAW to take over their own healthcare fund. The companies would pay a lump sum in, and the union would take responsibility for managing it. As my colleague David Welch has reported, the union actually asked that the healthcare fund be funded in excess of 100%. Is the union wary of its ability to manage it properly and it wants a cushion?

But what I find amusing right now is the hissy fits that are being pitched in Detroit over Congress’s moves toward a truly “transformational” fuel economy regulation. Congressional members and staffers are saying that the time for mere incremental improvements in fuel economy is over. That’s why the industry is looking at a proposed CAFE (Corporate Average Fuel Economy) rating of 35 mpg by 2020 with annual 4% improvements until 2030.

I don’t think CAFE is a good way to achieve better fuel economy. But I can’t help smirking when I see the U.S. companies fighting for transformational chnage on one front, and fighting it on another.

Reader Comments

naif

June 22, 2007 5:55 PM

do not! do not! let the uaw run the insurance. GM can fund it and run it or hire someone to run it while keeping an eye on it. the uaw will take twice as many people to run it and at twice the cost as would GM or an independent.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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