Great graph comparing wage and benefits between US and Japanese auto workers

[Hamlette]

http://www.prospect.org/csnc/blogs/ezraklein_archive?month=12&year=2008&base_name=is_detroits_problem_wages

This is from Ford which is the best off but my guess is the other two are similar.

If this graph is true, the major difference is legacy costs. So if they go bankrupt, who pays for those? The retirees? The federal government? So why not bail them out now and at least save the jobs while paying the same amount.

What we should do is assume the legacy costs and pay from them with a gas tax and tell the auto makers we'll give them some cash too if they will give us the electric car back!

[rucky]

1. Businesses could cut this down to japanese size with single-payer healthcare.

[FreakinDJ]

2. I wonder how many factory workers in Japan

are from 3rd World countries

I know Japan issues visas for workers from Thailand, Philippines, Cambodia........ect, ect

The Japanese Business modle includes in-sourcing now

[MichiganVote]

3. Not worth looking at without a graph of cost of living in the areas affected.

[Hamlette]

5. mostly irrelevant considering the wages are so similar

the graph makes it clear, wages are not the issue so cost of living is not the issue

legacy costs are the issue and it is not because Ford is more generous its because Ford has been in business longer and hence has more legacy costs.

[bain_sidhe]

25. No, it's relevant because

the cost of living in those southern states is, in general, lower, so the wages at the foreign owned plants down there actually buy more than the wages in the midwestern plants. On a COL basis, it's entirely possible that workers at F.O. plants make MORE than UAW workers. (In terms of what their wages buy.)

[MichiganVote]

26. Yup. You got it right.

[dipsydoodle]

4. Are the legacy costs

a function of how long Ford have been running as a company ? If so then it is it inevitable that the Japanese figure would currently be lower ?

[Hamlette]

7. yes, that's what the article explains

[dipsydoodle]

10. Must confess

I'd just responded from looking at the graph - thanks. I'm sure others in the future may just use the graph alone to distort the background to the difference.

[Veritas_et_Aequitas]

8. Essentially, yes. nt

[FarCenter]

15. Loss of market share, spinning out parts suppliers, and automation matter

"As Leonhardt correctly points out, the current difference between the American automakers and the Japanese automakers is simple: Retirees. But as Leonhardt says, that's not "a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country." Ford's been around since 1903. Toyota opened its first North American plants in the 1970s. This sort of thing matters."

---

They have lost market share, hence they need a lot fewer worker now, while the retiree population reflects the past when they had a larger production volume.

They used to be more vertically integrated, but whenthey spun out the part suppliers, e.g. Visteon, they appear to have kept the retiree obligations from those business units.

Automation had decreased the number of hours needed to assemble a vehicle. The union resisted cutting workforce to be competitive with automated factories, and kept the hours too high at the Big Three for too long.

[CitizenPatriot]

6. where are the ceo's salaries and the board member's salaries?

I'm really curious to find out exactly what is causing the disparity.

[Hamlette]

9. the article explains the disparity and CEO salaries have nothing to do with it

we are talking labor costs.

although CEO's make an obscene amount of money, as a percentage of costs it is usually tiny.

As the article explains, the legacy costs are higher for US manufacturers because they have been in business longer.

[CitizenPatriot]

14. I see that they are talking about labor costs

and I really appreciate the chart. I get the point about the legacy costs -- and that's a very interesting factor that I hadn't considered.

I'm still curious about the ceo's salaries and the board members' salaries. I'd like to see them compared before I accept that they aren't a part of the problem. It just seems odd to me that the bonuses, etc are not tied to performance in a meaningful way.

I guess what I'm really trying to say is that the Republicans are trying to make this about labor, and while I'm not averse to examining the labor costs and determining the truth, I'd also like to have our own agenda wherein we examined and compared the companies as a whole. I know that our process for appointing board members is highly faulty and when they aren't doing their jobs, who is there to ensure the company's fiduciary responsibility to the share holders? Over and over again, it seems its labor and share holders who are getting screwed.

Why can't we get any transparency re ceo salaries, where the money went for the bank bail out, etc?

Curious minds want to see the numbers.

[lligrd]

13. Here Is Some Interesting Info

Ford CEO Mulally earned $22.8 million

DETROIT—Ford Motor Co. President and CEO Alan Mulally received compensation valued at $22.8 million in 2007, down nearly 42 percent from the prior year, when he joined the company and collected a hefty signing bonus, according to a federal regulatory filing published Friday.

snip

Mulally also received $1.4 million in perks. Ford's executive perks include personal use of all of these: company phone cards and cell phones, car and driver service, season tickets to athletic events, club memberships and fuel and car washes for evaluation vehicles lent to executives.

For Mulally, the perks included $752,203 for his personal use of the company's jet, as well as personal use of the jet by his wife, children and guests "to ease the burden of Mr. Mulally moving to Southeast Michigan and away from his family in Seattle, Washington," according to the company's proxy, filed with the Securities and Exchange Commission.

snip

The company reached an agreement in 2007 with the United Auto Workers that will lower pay levels for thousands of U.S. hourly workers and transfer billions in retiree health care liabilities to a separate, union-administered trust.

More: http://www.boston.com/business/articles/2008/04/04/ford_ceo_mulally_earned_228_million/

[CitizenPatriot]

17. interesting -- thank you

It would be great to see all of the big 3's CEOs salaries, bonuses, perks, etc and how they compare to foreign companies and how they impact the bottom line.

I'm glad Ford CEOs saw fit to cut their pay, though it still seems like a lot of money to me. Wonder where GM and Chrysler stand on this?

Overall, we have become a society where we pay athletes and celebrities and CEOs ungodly amounts of money. Is it justified? I don't see that it necessarily is in my own industry and I'm curious about other industries, including the car companies.

[napi21]

11. In all fairness, it doesn't really matter if we're only talking about

$49 v/s $41 per vehicle! That pawltry # isn't even 1% of the cost of a vehicle no matter who makes it!

I think there's a whole lot more that nobody is paying any attention to. What about all the factories that the US mfgs. have shut down but haven't sold? SOMEBODY is still paying the property taxes on them, and most likely there's equipment in them that is still depreciating, and if there's equipment still there, don't they have st least ONE security guard to protect it from vandals?

The Japanese haven't expanded in the US to the point where they've had to shut down factories due to lower production requirements.

The other thing that hasn't been talked about is capacity. If a plant has the capacity to produce 5,000 vehicles a day, (just a guess. I have not idea what the capacity would be.) but they've reduced production to 2,000, the cost of operating the equipment, equipment depreciation, cost of pwer of operation, all increase exponentially because most of those costs are fixed, and all are direct costs of product.

There's way too much we don't know to be able to make a fair comparrison.

[dipsydoodle]

16. Figures quoted are not per vehicle.

They are per hour - just a slight difference.

[napi21]

24. So how many hours are allotted to make each vehicle?

All the points I made are still asigned to each vehicle via some calculation. Wether it be per hr. per shift, or per day. I'd still like to know how they made their calculations, because the final answer changes dramatically when the estimated production schedule changes.

As I said before, If you produce 5,000 vehicles in 2 16hr shifts, your costs are calculated on a 315 unit per hour basis. If that schedule is reduced to 2,000, those same costs are only spread over 125 units. BIG BIG DIFFERENCE.

[mrreowwr_kittty]

12. Very useful. Thanks! nt

[FKA MNChimpH8R]

18. Why aren't the CEOs of the Big Three screaming for

single payer health care? That would be one of the most compelling arguments that they could make.

[malaise]

19. I'd like a graph comparing management salaries

and perks.

[SoCalDem]

20. PBGC (we, the taxpayers...at 40cents on the dollar)

The company wriggles out from under pension obligations. They get away with labor-theft for decades, by withholding wages owed workers (promised them deferred payment via pension)..pay the workers nothing owed them, and dump the responsibility on the public/government..

[NNN0LHI]

21. And they will never have the legacy costs of American companies because they don't pay a retirement

Without a union all their workers will ever have is a 401-k account suspect to liquidation at the whim of the stock market and medicare if they live that long.

Don

[Lifetimedem]

22. I have a question

These are from US workers. A company like GM has alot of CHEAP foreign labor, That should be considered in the legacy costs.

The company could be made to put a % of the savings from the cheap foreign labor into the legacy fund.

That cheap labor should help their bottom line IF THE PROBLEM is really UNION wages ...so why not help fund the legacy costs with a part of those savings?

[housewolf]

23. I knew that... but what I don't understand is why the heck

NONE of the Dem senators speaking the other day, or anyone in the media, calls out the Republicans on it???? Why didn't any of those senators say something like "Wait a minute, Senator Corker... That $78/hr figure you're talking about, that's not what an auto worker takes home. They take home an average of $3 more. Not even if you factor in the current worker's benefits, which average only about $6/hr more. The discrepency you keep harping about is the cost to the automakers of their retirees' retirements. What you're asking for is for today's current workers to take on the company's responsibily for their retirees."

Why the heck aren't people screaming the truth true fact from the rooftops instead of praising Corker to the high hilt? Why do they let Corker and the Repubs keep putting out distortions like this without correct????

I just don't understand it.