When Ford Motor Co., Chrysler Group and General Motors Corp. formally begin contract talks with the United Auto Workers over the next few days, their wish list will not be a secret. They want to reduce their total labor costs to match those of the companies that are killing them: Toyota Motor Corp. and Honda Motor Co.:
WHAT THE COMPANIES WANT: The Detroit Three pay about the same hourly wage as their rivals with U.S. factories. But when you add in absenteeism and pension and health care costs for active and retired workers, the companies say their costs are $25 to $30 higher than Toyota (nyse: TM - news - people ), Honda (nyse: HMC - news - people ) or Nissan Motor Co. (nasdaq: NSANY - news - people ) The Detroit Three lost a combined $15 billion last year.
THE COSTS: According to annual reports, Ford's hourly labor cost averaged $70.51 last year. GM's was $73.26 and Chrysler's was $75.86. Toyota, Honda and Nissan have costs that average $48 per hour.
WHAT THE UNION WANTS: UAW President Ron Gettelfinger recently has said the UAW is not in a concessionary mode. The union gave health care concessions to GM and Ford in 2005, and Gettelfinger has hinted that Chrysler would get a similar deal. It also has approved competitive work rules in many factories. Some rank-and-file members say they expect more concessions in the contract talks, while others are opposed because auto executives are making millions.
OTHER ISSUES: The companies also want to deal with absenteeism and the jobs bank, in which employees get most of their pay while not working. Both contribute to the higher costs, the companies say. But the biggest issue is the unfunded liability for retiree health care, estimated to total $90.5 billion for the Detroit automakers. The companies have floated the idea of paying part of the obligation into a union-run trust, relieving the companies of the obligation. Honda and Toyota, with far fewer retirees, don't have the same expenses. The union has declined to comment on such a move.