Lords of Death Forums Lords of Death Forums LoD General Discussion This one's for you Stretch....

I heard a stat yesterday that Toyota pays a total of something like $45/hr for it's average employee in salary and benefits. Ford pays in the neighborhood $73/hr. Doesn't that wide gap in costs make it harder for NA auto makers to make competitive cars?

Why do you omit, deny, or refuse to recognize valid points presented in this thread. Your worthless to have a conversation with. That is why people can't not fucking stand your one-sided BS

Now go read what Rolo wrote about wage differences between the auto companies and then post what the Heritage foundation states about UAW yearly incomes.

Read this bullshit.. Here



Detroit, Michigan--Massive job cuts at General Motors, America's largest carmaker-- coupled with the bankruptcy of Delphi, America's biggest autoparts maker--have provoked predictable handwringing from liberal pundits who worry that America is "losing its manufacturing base." But the wrenching change now buffeting the auto industry defies the usual press formulas. Just listen to Steve Miller a turnaround specialist who is steering Delphi's restructuring process. He exploded the myth of America's "endangered" union manufacturing jobs at his October press conference announcing Delphi's move into Chapter 11: "We cannot continue to pay $65 an hour for someone to cut the grass and remain competitive."

Grass cutting is a manufacturing job?

Miller's frank assessment of unsustainable labor contracts is a refreshing dose of candor in an industry that for too long has talked around union-labor costs in a way that is totally divorced from the realities of the U.S. labor market--much less the global labor market.

While America's national press has gleefully covered the front-office shenanigans of Republican fat cats like Enron's Ken Lay, it has entirely missed the disease eating away at the roots of American manufacturing: Behind the threat of strike, greedy Democratic union bosses have built an unsustainable entitlement-wage culture that is now crashing spectacularly in America's heartland, disrupting lives, and threatening some of America's biggest publicly traded companies.

Take grass cutting. As defined by the current United Auto Worker contract negotiated with the "Big Five" (GM, Ford, Chrysler, and top parts makers Delphi and Visteon), an auto "production worker" is a job description that covers anything from mowing grass to cleaning the toilets. In the real world, these jobs would be outsourced to $8 an hour, no-benefit wage earners, but on Planet Big Five, these jobs get the same wages as any auto line-worker: an average $26 an hour ($60,000 a year) plus benefits that bring the company's total cost per worker to a staggering $65 an hour.

But at least the grass cutters are working for their pay. The UAW contract also guarantees that 12,000 autoworkers get full wage for doing nothing. On the heels of Miller's straight-talk, the Detroit News reported that "12,000 American autoworkers, instead of bending sheet metal, spend their days counting the hours in a jobs bank." These aren't jobs. And they certainly aren't being "lost" to China.

"We just go in (to Ford's Michigan Truck Plant) and play crossword puzzles, watch videos that someone brings in or read the newspaper," The News quoted one UAW worker as saying. "Otherwise, I've just sat."

For Delphi, this idled labor cost $400 million in the second quarter of this year alone. Facing similar numbers until the contract's end in 2007, Delphi took refuge in bankruptcy. "The jobs bank must be eliminated," says Miller. "Paying people not to work is just not sustainable."

As the auto companies have increased productivity through automation, the UAW calculated that jobs banks would make it too expensive for automakers to close plants and lay off workers. While that plan has worked, it has severely damaged the long-term viability of the industry--and by extension, future job creation. It also led to this week's GM bloodbath, as the company struggles to close a wage gap with American internationals (foreign automakers manufacturing in the U.S.) that now stands at $1319 per vehicle produced.

Simply put, Big Three autoworkers have been living in a fantasy world.

Statistics tell the tale. In his landmark study of the 2003 Big Five contract, Sean McLinden of the Center for Automotive Research (CAR) found that "in 1960, the UAW was 16 percent higher than the overall U.S. wage rate. . . . By 2003, the UAW average rate (with COLA) was 68-percent higher than the average manufacturing rate of $15.74 an hour."

McLinden notes that the contract reads as if autoworkers labor in a vacuum, without regard for market forces. "The workers involved will not lose their jobs at the company--they must be transferred to other facilities, bought out, voluntarily retired, or supported by protected status programs (jobs banks). Workers who refuse to transfer after layoff will... eventually be paid 100 percent of their straight pay. Indeed, UAW employment can only fall at the rate of natural retirement."

Furthermore, UAW members are guaranteed a traditional "30 years and out" provision, meaning that many retirees begin drawing full pensions in their early Fifties, burdening the Big Five with unrivaled legacy costs. Delphi, for example, shoulders $22 per worker-hour in legacy costs compared to as little as 25 cents for independent competitors like Leer and Johnson Controls.

Miller stresses that Delphi's competition for these jobs are not foreign laborers in China or Mexico--but workers right here in the Unites States. Given the huge productivity advantages of U.S. factories, relatively high-paid American autoworkers remain competitive with Mexican workers paid $3 an hour. CAR's McLinden confirms this. His analysis of independent suppliers (workers not covered by the fat Big Five contract) covering 19,379 UAW members in the U.S. found an "average wage of $15.76 an hour--remarkably close to the $15.77 per hour U.S. average manufacturing wage in 2003."

Miller does not deny that some labor-intensive auto-parts jobs (such as spark plugs manufacturing) must be moved abroad. But in production, where assembly, transportation, or quality are key factors (in the making of dashboards, for example), manufacturers will rely on U.S. workers--assuming they don't cost two to four times the market rate. Indeed, Japanese manufacturers and their suppliers have created 60,000 good-paying jobs for Americans.

The coming months will be painful for many American autoworkers. Accustomed to a certain lifestyle, they will see their wages cut in half, jeopardizing second homes, college tuitions, and car payments. One blue-collar Delphi worker interviewed by the Detroit News makes $103,000 a year operating a forklift and fears the consequences if his pay is drastically reduced. But many Americans will ask how a forklift operator felt entitled to a six-figure income in the first place (according to Bureau of Labor Statistics, the average forklift operator wage in the U.S. is $26,000). It is an opportune time for political leadership to step to the plate and speak with candor, but the signs are not encouraging.

UAW leaders are threatening strikes, and their Democratic allies are parroting tired slogans of government bailouts and trade protectionism. Michigan's Democratic governor Jennifer Granholm recently traveled to Washington, D.C. to stump for auto-import tariffs, while Senator Hillary Rodham Clinton demanded President Bush convene a "manufacturing summit" to examine a taxpayer bailout for the Big Five's "enormouslegacy costs, including paying the health care and pensions of retirees."

These dinosaurs insist on turning back the clock, but Steve Miller understands that America's manufacturing future will only be lost if it loses sight of market economics: "We are in a market for human capital," he explains "If you pay too much for a particular class of employee, you go broke."

Heritage Foundations Stance on UAW wages killing Auto Makers

ISSUES > Economy


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November 19, 2008
Auto Bailout Ignores Excessive Labor Costs
by James Sherk
WebMemo #2135

Without government intervention, one or more of the Big Three automobile manufacturers--General Motors, Ford, and Chrysler--faces restructuring in bankruptcy. Bankruptcy would not be the end of the Big Three but a new beginning. Coming out of bankruptcy, the automakers would start fresh, free of the contractual obligations that have kept them uncompetitive. The United Auto Workers (UAW) and Detroit automakers want to avoid bankruptcy and are seeking a taxpayer bailout. Such a bailout, however, is not an acceptable alternative to bankruptcy because it would delay the restructuring the Big Three need to become competitive again.

UAW workers earn $75 an hour in wages and benefits--almost triple the earnings of the average private sector worker. Detroit autoworkers have substantially more health, retirement, and paid time off benefits than most Americans. These benefits, and a JOBS bank that pays UAW workers nearly full wages to not work, have been a major force driving the Detroit automakers' current fiscal woes. Consequently, Congress should not force all Americans to pay for high wages and benefits for UAW workers.

UAW Workers Highly Paid

The Big Three automakers are asking taxpayers to bail out some of the most highly paid workers in America. Chart 1 shows the average hourly compensation (wages and benefits) earned by all private sector workers and for UAW represented workers at the Big Three. It also shows the hourly compensation at Japanese plants in the United States.

The average private sector worker earned $25.36 an hour in 2006--$17.91 an hour in cash wages and $7.45 an hour in benefits such as pensions, paid time off, and health insurance.[1] Autoworkers at Japanese plants located in the United States earn substantially more than this: between $42 and $48 an hour in wages and benefits, which amounts to over $80,000 a year in total compensation--hardly cheap labor.[2]

The typical UAW worker at the Big Three earned between $71 and $76 an hour in 2006. This amount is triple the earnings of the typical worker in the private sector and $25 to $30 an hour more than American workers at Japanese auto plants. The average unionized worker at the Big Three earns over $130,000 a year in wages and benefits.[3]

Generous Benefits

Most of the Big Three's UAW workers' compensation comes as benefits, not cash. Table 1 breaks down the average hourly labor costs for a UAW worker at Chrysler in 2006. Ford and General Motors have similar compensation profiles.

Only 38 percent of the $75.81 an hour that Chrysler's UAW workers earned came as base wages. The rest came as benefits (though some of those benefits, such as overtime premiums and paid vacation days, are paid in cash). Health care costs are the most expensive benefit, accounting for over a quarter of total compensation.

Gold-Plated Health Care

Health care costs the Big Three so much because the UAW negotiated gold-plated health benefits that include medical, hospital, surgical, and prescription drug coverage. These benefits also cover durable medical equipment (e.g., hearing aids), dental benefits, and even Lasik eye surgery.[4] For all this, GM workers and retirees must pay monthly premiums of $10 for an individual and $21 for families.[5] As a result, UAW workers and retirees have some of the most comprehensive and least expensive health care in America.

Competitive Disadvantage

These gold-plated health care benefits put the Big Three, and especially GM, at a competitive disadvantage. For example, GM has three times as many retirees as active workers, and health care costs for both groups cost the company $4.6 billion in 2007. The UAW's lavish health benefits added $1,200 to the cost of each vehicle produced in the United States.

The Japanese automakers, by contrast, provide standard health benefits to their American employees. Consequently, health care for active workers cost Toyota $215 per vehicle in 2006.[6]

Every American buying an auto made in Detroit pays an extra $700 to $1,000 to support health benefits far more generous than most Americans receive.

UAW employees also receive the following extraordinary provisions:

* 30-and-Out contracts. UAW employees work under a 30-and-Out contract that allows them to retire with generous pension benefits after 30 years on the job, irrespective of age.
* Seven weeks' vacation. A Chrysler worker with 15 years' tenure was entitled to 34.5 paid holidays and vacation days in 2006--seven weeks in paid time off.[7] This is three weeks more paid vacation than the average private sector worker with similar tenure.
* Paid not to work. Under UAW contracts, workers whom the automakers let go when plants close are not laid off. Instead, after exhausting regular unemployment payments from the automakers and the government, they are transferred to a JOBS bank where they are paid nearly full wages to not work.

A Step in the Right Direction

These affluent wages and benefits prevent the Detroit automakers from successfully competing. The Detroit automakers and the UAW have known about this competitive disadvantage for decades, but the UAW resisted making any concessions until 2007--when bankruptcy became an impending reality.

Under the 2007 contract, the Big Three and the UAW agreed to the following:

* To transfer, starting in 2010, retiree health care obligations to a Voluntary Employee Benefits Association (VEBA) run by the UAW. The automakers agreed to collectively pay $60 billion into the VEBA, after which time the UAW would have full responsibility for providing retiree health benefits. This agreement takes the cost of providing health benefits off the Big Three's balance sheets.
* To limit time in the JOBS bank to two years.
* To require workers in the JOBS bank to accept new employment offers.
* To create a two-tiered wage structure. Detroit automakers may now hire entry-level workers for "non-core" positions (those not directly involved in manufacturing automobiles) for roughly $26 an hour in wages and benefits. Although these entry-level workers may transfer to the higher paid vehicle assembly jobs as vacancies occur, they will never receive retiree health benefits.

Too Little, Too Late

GM estimates the new contract will eventually cut 70 percent of their labor cost gap with the Japanese manufacturers.[8] Average compensation will fall to $54 an hour once the contract takes full effect.It will, however, take years for the Big Three to realize these cost savings. The cost reductions affect only a minority of workers and occur gradually as current workers retire.

The vast majority of UAW workers in Detroit today still earn $75 an hour, and the Detroit automakers must still find $60 billion to finance the VEBA. Detroit's labor costs will not fall as much or as rapidly enough as the Big Three need to restore their competitive position and remain solvent.

Had the UAW made similar concessions in the early 1990s, it might have prevented the Big Three from falling into such dire economic straits. It did not, however, and the new contract is too little, too late to keep the Detroit automakers solvent.

Taxpayers Should Not Bail Out the UAW

By seeking a bailout, the UAW, along with the Detroit automakers, are asking taxpayers to help keep UAW earnings at $75 an hour when the typical American takes home a third that much. The Big Three also want Congress to use taxpayers' money to pay billions of dollars into the new health care VEBA, thereby funding health care benefits for UAW retirees that are far more generous than those provided by an already under-funded Medicare system.

UAW workers understandably want to preserve the standard of living to which they have become accustomed, but that standard is not sustainable in a competitive economy. Congress should not tax all Americans in order to maintain UAW workers' affluent lifestyles.

James Sherk is Bradley Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation.

This thread fucking sucks, I cant believe you guys have time to read all this.

My problem with the big 3 is that they chose leaders that didn't have the right vision to manage their companies. Sure, anyone can be a CEO when you make decisions on a day-to-day basis. Great leaders however, are never surprised and they see things before they happen. They see what's wrong and try to work to overcome that. Whether it is diversifying, cutting costs, working against the unions, stacking cash reserves. You can't assume economy is always going to be up without hick ups. Those CEOs and VPs are getting paid a lot of money so they can make the right kind of decisions, otherwise, why don't we put average high school kids in their place and pay them $8/hour and save millions?


I agree bailout needs to happen. However, they need to kick out everyone responsible for the mess(in some countries they would go to jail) and bring in people who will change things around. Responsibility starts at the top. The Bush era brought about a lot of incompetency everywhere on all kinds of levels. It passed for competency because the rest of the world financed our bubble. Just throwing money at the problem is not the answer. Now we have to go back to the roots of hard work and competent and responsible management to get out of the hole.

Funny how it took you 3 days to find some bullshit made up response with weak facts.

The opinion of the writer on legacy costs and franlky the overall analysis is crap

How do you balance a budget when expenses exceed income?

You're a businessman, you know you can run a "deficit" for a while but sooner or later the lines of credit dry up. How do you balance the budget at that time?

I know you make more then I do (and no harm flet, you have worked for it). But unless we BOTH pay more then that national VISA card gets maxed.

And by VISA I mean foreign nations. When did we become someones bitch to call them and ask for a higher limit on the visa card (as a nation). When did we become so fucking pathetic that we have to beg others to lend us money?

Because NOBODY (rich, Poor and all inbetween) is willing to pay a fair stake for police, pothole filling and AC130 gunships. So we pay a %. Then the rest is "deferred", till when?

As a nation the USA is out of paper on the postit pad for IOU's. Other nations have been burned by US investments (subprime, pseudoprime, prime. All the same it's shit). So you as a rich republican say who cares!!!!! Well, they keep you lights on (2.2 billion $ per day). What do you do when they stop that? What happens when they want hard collateral for it?

Nobody in this nation has paid their share in over a generation. You are used to "deferring it". You don't know any better, as does anyone else. It is sad, people like you, myself and everyone else is destroying this nation. We all do it, rich, poor and everyone inbetween.

This is not a slam on you, stretch or others. But there is NO WAY OUT BUT TO RAISE TAXES on everyone. There are only 2 solutions, both unpleasant.

You as an American have RAPED your country blind with IOU's for the crap you wanted. That VISA card is about MAXED, then what?

And if you say "all countries do that", then the answer is "no they do not". Other countries have spent 10+ yrs paying down fed debt. Others even have a federal surplus. So that line of bullshit reasoning is crap.