Introduction GMFC is a manufacturing company facing increasing levels of healthcare costs for its unionized employees. Over the past year, health care costs per employee have increased 11 percent, despite benefit reductions previously granted by the Local 384 union. The rising costs of health benefits, coupled with pricing pressures from foreign manufacturers, have increasingly made more difficult for GMFC to manage health benefit costs and remain competitive. As a result, GMFC is considering subcontracting workers or hiring part-time workers who would not be eligible for health care benefits. Neither option will be welcomed by Local 384. While a new labor contract is negotiated, GMFC management must propose an agreement to contain or reduce health care costs that Local 384 is willing to accept. GMFC Statement on the Impact of Employee Healthcare Costs GMFC is committed to providing its valued employees with quality healthcare coverage. However, according to data reported by Fossum (2012), health care cost inflation has increased at a much higher rate than overall inflation, pushing up the relative costs of employer-provided health care of work. In industries with relatively stable and high consumer demand for the product, employers can increase product prices to help cover increased costs of wages and benefits with minimal negative effect on a worker's employment levels. company (Fossum, 2012). However, in situations like GMFC where foreign competition is driving down prices, passing cost increases onto the consumer is not a viable strategy. Therefore, unions are less likely to demand high wage increases in sectors with significant foreign imports (Fossum, 2012). For the same reason, it is not reasonable for Local 384 to expect that GMFC can continue to manage the rising health care costs for its employees as product prices decline and the resulting reduction