Healthcare costs continue to rise here in the U.S. I can sympathize why the United Auto Workers and other unions in Detroit are fighting tooth and nail to maintain their phenomenal health coverage. Foreign automakers with plants on U.S. soil (called “transplants”) have made sure to match such benefits to keep their workers happy and, more importantly, prevent any unions from forming.

So what would happen to those benefits if unions didn’t exist anymore?

They would disappear.

That’s the simplistic answer. Unfortunately, it won’t be that easy.

Many analysts believe that China and possibly even India will replace the U.S. as the major car markets in the world. I agree and that explains why Toyota and other automakers, including Ford and GM, are establishing facilities in those countries. Also, as emerging markets with highly skilled and educated labor force, it is quite less expensive to not only manufacture vehicles for domestic consumption but for international sales as well. This is not new: GM has its Aveo built by Daewoo.

One of the reasons labor costs in such nation are so low is nationalized health care. While foreign automakers do contribute some for each employee, such contributions are held by the government which is used to fund said employee’s healthcare and their retirement. When an employee stops working, the government steps in and the automakers’ contributions stop there. This is unlike the U.S. where the Detroit Three continue supporting retirees and their descendents.

If the unions vanish in the U.S., I see transplants like Toyota, Honda, BMW, etc., reacting in several ways. They will continue to provide benefits. They will also begin to decrease them as well. Vicious? Mean-spirited? Not really. Unless U.S. healthcare changes in the near future, the companies will be following current trends in U.S. industry.

Here’s the more worrisome part from transplant workers. The reason automakers established their facilities in the U.S. because it was more cost-effective than, let’s say, importing parts like seat covers. If the companies find it’s more effective to import such products than have domestic part makers manufacture them or have certain parts assembled elsewhere then imported, they may do so, letting go of their employees. Or, worse, they may establish future plants in other countries. While I think such a scenario is unlike (and my reasons will be in a future post), it is a viable option from a business stand point.

Do I advocate, then, for workers in transplant to form unions? No, though they definitely have their place. (I can’t imagine what it would be like to be a teacher without the unions.) I want, though, everyone to be aware what possible impact a truly global economy means to the average American. The above scenario works in favor for Americans who realize this fact as well. Americans sometimes forget that there’s a very, very, large world out there with people just as smart or smarter, self-centered, and ambitious as any American tycoon. And they’re playing by their rules for a long, long time. We’ve got to adjust not only to that fact but turn the tables, so to speak, as well.