Will GM, Ford, and Chrysler Reduce Costs and Get Bailed Out Before It Is Too Late

The Big Three need to move fast to reduce costs and provide a clear path to profitability before they lose control.

Although much like the steel workers union that were so clever they negotiated themselves into such high compensation they eventually got themselves fired, the auto industries slower rise to gluttony has proved more sustainable.

Transparency into wages at every level - not just the Executive level - will allow for a more honest look at the reality. Many employees, charged with assembling cars make over $100,000 a year with overtime and benefits calculated into total compensation.

Executives with millions in compensation are rewarded for failed policies and for continuing a mentality that doesn't work. The fact they took private jets to D.C. doesn't really bother me. Heck, if millions of jobs are at stake, I don't want them waiting on a Delta or Northwest flight that may never take off. The reality is that their time is valuable enough that private jets make sense. It doesn't send a great message, but neither does the UAW efforts to raise compensation so that their employees aren't cost viable anymore.

We need labor reform combined with innovation. More efficient cars that provide what the market demands - comfort with a low total cost of ownership. To do this cost cutting is critical. Everyone at the Big 3 from the top down needs to be adjusted for the new world with new realities. That means new schedules, pay cuts, and concessions that may hurt in the short term, but will mean a viable auto industry.

Core Practice Partners has a plan. We designed the labor strategies and schedules for BMW and have worked with parts of GM in the past. If you want the plan, give us a call. 212-534-0539.