So much as been said about the wages of the Big 3 workers. First, the figures are misleading at best, downright lies if you are generous. At $73/hr average as the GOP senator keep citing, these workers would be making $150,000 a year. They are not taking home $150K pre tax. That's a fact.
Where does that $70-73/hr come from? The figure is not entirely made up. In fact, car companies have been using it to tell Americans how generous they were to to their employees. That figure has three components. The first one is cash payments, which is pretty much what these people make. It includes wages, vacation, and over time, and gravitates around $40 per hour. The second component does not show up on a paycheck but can be fairly added to what these workers make. It includes health insurance and pension for a total cost of $15 per hour. The thrid component is retirement and it costs around $15 per hour, bringing the total to ~$70.
A unionized automobile worker makes $55 per hour ($40 real wages, $15 on health insurance, pension, and other fringes).
Let's compares apples with apples. How much US workers at Honda and Toyota make? Well they make $45 per hour. Do you really think the entire automobile crisis can be solved with $10 per hour per worker? Absolutely not.
That's not even the point yet. You can't have a good discussion that can lead to solutions if you start with a lie. That's $70 an hour is a lie. Let's settle with $55 per hour and see if a labor cost reduction can lead to more affordable cars, assuming that if they become cheaper, people will buy more it. Big assumption!!!
Labor costs only make up 10% of the cost of getting a car to the dealership. Cut their pay from $55 to $45 and you will cut less than $1000 on the cost.
$1000 will not make anyone decide on a car that consumes more gas and is more likely to break. Fiction or reality, that's the perception. Until they change that, they will continue to fail. Workers cannot change that. They can continue to take pay cuts while executives continue to believe that Hummers, Yukons, Suburbans, Tahoes are what America need.
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Comments: 18
These are tough times. Everyone should take a cut over there. But even if they sell the jets, executives cuts, labor cost cut, the problem will remain.
They need to make better cars. Forget those ridiculous cars. Retool and make hybrids. Small cars.
Yes, some of them make more than college grads. They have tons of years of experience and work on their feet. But, that's an entirely different topic, I guess.
Thanks for the comments.
people are fools to show sympathy to these American cons that think of nothing but how to scam the people that make them rich.
Bottom line the 3 had the 70's, the 80's and the 90's to get it right...they didn't.
They still design and make crap and get raped by the unions to do that.
Why do you think that they have all of a sudden seen the light?
They have proven that they are schmucks for almost 40 years.
Don't bail them out and chaos can result.
If the cost to the Co is 10% of a vehicle for all labor that is quite satisfactory. I don't see their gripe.
The fundamental question is why are Americans not buying them? It's not cost. Greed takes us to cost. Were they greedy and making awesome cars, we would not be bailing them out.
I agree with you that the cars are expensive. I don't agree that CEO pay cut and wages cut can reduce their prices however. Cuts from wages from CEO to assembly line worker won't make the thing cheaper. Certainly if it junk now, it will be junk then. The problem is elsewhere. Retirement? You bet. Healthcare? you bet. What happened to lean manufacturing?
These companies make great cars when they care. Ford Explorer is an excellent car. Chevy malibu is the car of the year. Side by side they compare well with those foreign cars and beat them.
The problem is they decided not to compete in some categories such as small and mid size sedan. They left it to Toyota Corrola/Honda Civic and Toyota Camry/Honda Accord. The problem is, that's what the middle class drives. They don't drive Explorers, at least not the majority. The SUV market saw a boom in the mid nineties and these guys thought $2 a gallon gas was forever, SUVs are fashionable, therefore that's what we are going to make.
They were wrong. Lesson learned. Not the fault of the damn worker. They don't make the decision to fabricate 40,000 SUVs a year and 15,000 Sedans.
Still it is hard to argue that the $1000 you note is not significant. You also leave out the legacy costs of the large number of retirees who do quite well even compared to government retirees. Regardless if its 10% of total car costs or what, US car costs have to be cut to compete, where might they go for better savings? The upper levels of management have had their cash payments cut already, should they go for all their other forms of compensation too? Will it make any more difference than that 10% labor charge?