Things will Work Out

Implications: Both management and labor are acutely aware of their mutual dependency and know that neither can succeed without the other party's support. Towards these ends, the parties are negotiating in areas that are new and uncharted; this is necessarily time consuming because of bounded rationality which is the inability to define and cover all the bases for lack of prior experience. Accordingly external stakeholders need to take a patient approach and let things work themselves out versus worry about missed deadlines and what are justifiable hiccups along the way.

Analysis: At a high level, the UAW realises the auto industry predicament particularly as it applies to the Big 3 and its supply base. This has been learned through a sometimes bitter experience in large situations such as Dana, Tower, Delphi etc. The Union understands also the balance sheet and operating impact from a health care liability transformation and how it might lead to some closing of the competitive cost gap against the transplants. Accordingly it is a considered opinon that Union leadership is generally, perhaps not unanimously, supportive of providing management with this opportunity to better compete - read job growth and security - against their non unionized competitors.

Given this basic commonality and confluence of objectives it is fair to deduce that a settlement will happen despite twists and turns that characterise all complex negotiations. Neither party can survive a strike so there are built in deterrents against irrational behaviour.

There are two broad areas that are the most complex; First to hammer out the pricing and mechanics of making a liability transfer and second what might the Union get in return for this - job security, bonuses, less plant closings/outsourcing etc. To be sure there other issues too, it is a contract negotiation after all, but the above issues will likely be ones where there is the least amount of historical guidance.

These are defining times for the Union and the Big 3. They will work it out.