In an effort to stop the migration of many automobile manufacturing facilities from the Detroit area, Detroit's city council is considering passing a statute that would give investment tax credits to auto manufacturers. Effectively, this would reduce auto manufacturers' cost of capital and high tech equipment in their production processes. On the evening of the vote, local union officials voiced serious objections to this statute. (Hint: Consider the impact that the statute would have on auto manufacturers’ capital-to-labor ratio.)

Outline the basis of the argument most likely used by union officials.

As a representative for one of the auto-makers, how would you counter the union officials' argument?