From Dec. 1 WSJ editorial America's Other Auto Industry:
Consider labor costs. Take-home wages at the U.S. car makers average $28.42 an hour, according to the Center for Automotive Research. That's on par with $26 at Toyota, $24 at Honda and $21 at Hyundai. But include benefits, and the picture changes. Hourly labor costs are $44.20 on average for the non-Detroit producers, in line with most manufacturing jobs, but are $73.21 for Detroit (see chart below).
This $29 cost gap reflects the way Big Three management and unions have conspired to make themselves uncompetitive -- increasingly so as their market share has collapsed (see the chart below). Over the decades the United Auto Workers won pension and health-care benefits far more generous than in almost any other American industry. As a result, for every UAW member working at a U.S. car maker today, three retirees collect benefits; at GM, the ratio is 4.6 to one.
From a slightly different angle:
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The chart [below](click to enlarge) is from the 2008 Harbour Report on automotive manufacturing productivity, showing the $606 per vehicle labor cost advantage for Toyota vs. the Detroit 3 in 2007, because of the average hourly labor rate of $75 for the Detroit 3 compared to the Toyota hourly rate of $47. Looking forward, Harbour predicts a labor rate of $54 per hour by 2011 for the Detroit 3, and only a $97 per vehicle cost disadvantage per vehicle.
Also:
GM sales in 2007: 9,370,000 vehicles
Toyota sales in 2007: 9,366,418 vehicles
GM profit/loss in 2007: -$38,730,000,000 (-$4,055 per car)
Toyota profit in 2007: +$17,146,000,000 (+$1,874 per car)
(from: Larry Kudlow and Sen. Tom Coburn on CNBC's "Kudlow & Company")
Lots more worth reading on Carpe Diem.
Humor is not only fun, it works because it carries a bit of truth. In the spirit of truth and humor: click here. (Warning to the sensitive: the language is blunt.)
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Update: Another good article from back in Feb. 2006: "Against Toyota, GM Need to Mind the Gap" and a more recent one "Some companies are too pwerful to fail"
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Update 12/12/08: Here's another: Bankruptcy Doesn't Equal Death
1 comment:
Again, as mentioned on a previous post, we are essentially bailing out the UAW. Unions exist to eliminate competition.
One blogger requested that I provide evidence to show that the outcome of bailing out “The big 3” (UAW) would be much better than the alternative – failure and required restructuring. Well, we should be able to see how $14 or even $50 billion wouldn't solve the problem that both the UAW and government have created - anti-competitive regulations and cost choke-holds – given their balance sheets (GM, primarily).
I suppose at the same time we could attempt to compile data to show how much cost and negative output unions and unemployment benefits have cost us; however, that attempt would be just as difficult. The long-term (20 years or more) is what we must consider, and history will show, just as it has before, the failure in the thinking "too big to fail"
Here is an article that provides a much better explanation than I can, at the moment.
http://mises.org/story/3253 The End of the US Piano Industry
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