The union contracts ratified at Ford Motor and General Motors last week were the most generous for workers in more than a decade and represented a striking shift from years of cuts and stagnant wages, the New York Times reported today. But for automakers, the pay raises will add to the pressure to maintain profits and could spur a shift of less-profitable car production to Mexico from the United States. Ford and Fiat Chrysler, for example, are considering moving some passenger car production to lower-wage factories in Mexico from American plants. In their place, the companies would make more high-profit trucks and sport utility vehicles in the United States. That shift could cause production issues down the road, particularly if gas prices increase and temper consumer demand for pickups and sport utility vehicles. “From the company’s point of view, the U.S. is where you have to build your premium products,” said Harley Shaiken, a University of California, Berkeley professor who studies the auto industry. “To cover the cost of labor, you have to go upscale.”
