By on May 11, 2010

Speaking at the same Detroit conference on the auto bailout that Steve Rattner and Ron Bloom attended, the Center for Automotive Research’s Sean McAlinden proclaimed the end of Detroit’s era of unsustainable high wages. In 2007, said McAlinden, building a car in North America cost GM about $1,400 more per car than it did Toyota, thanks largely to a $950 health care charge. Since then, GM’s bailout and renegotiated wage and benefit contracts with the union have actually brought GM’s hourly compensation to just under what the CAR says the transplants pay. The AP reports that McAlinden’s estimate of GM’s average hourly worker salary is $69,368 while the transplant average is $70,185. Better still is McAlinden’s prediction that

between 2013 and 2015, Toyota could even be paying $10 more per hour than GM unless the Japanese company reacts and lowers wages.

And all it took was giving the UAW a $17.5 stake in the new GM!

Of course, there’s some question as to the veracity of anything that comes out of the CAR. Largely funded by unions and the Detroit automakers, CAR’s assesments have been plenty controversial in the past. This time though, it’s hard to see how cooking these numbers helps anybody. After all, the UAW hardly comes out of this looking like roses with its membership… unless we see these numbers used in a union counterattack.

And that’s not a scenario that’s entirely out of the question. After all, GM may be beating the transplants on hourly worker wages, but compare white-collar salaried employee compensation, and it’s clear that GM still pays its non-hourly workers quite well by comparison. According to McAlinden,

Salaried workers at the Detroit automakers made $122,963; at foreign competitors, they made $81,506.

That won’t make the union too happy. But then, they won’t really have much to say until their VEBA fund is able to monetize its stakes in GM and Chrysler. And if those stakes don’t yield enough cash to meet VEBA’s obligations, expect things to get nasty all over again. And then there’s the issue of pensions, which the GAO recently warned could compromise the whole auto bailout. It’s not clear if McAlinden includes these looming pension bills in his compensation analysis, but it’s likely he doesn’t considering GM has no public plan for how to deal with the looming crisis.

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16 Comments on “Center For Automotive Research: Detroit Beating The Wage Gap...”


  • avatar
    mikedt

    Of course once you add in average Big 3 executive pay the domestics are at a disadvantage once again.

  • avatar
    psarhjinian

    Considering that wages—blue or white-collar—weren’t really the problem, this is all kind of moot.

    GM, Ford and Chrysler’s problems stemmed from not being able to convince people to pay a reasonable price for their product. The cost gap was always a convenient misdirection that allowed the domestics’ miserable marketing and product planning to go unscathed.

  • avatar
    geeber

    While the white-collar wages are higher, it is my understanding that white-collar workers and retirees have seen a serious reduction in benefits that blue-collar workers were spared (because they were covered by a contract, and their benefits package could not be unilaterally reduced).

    Labor costs are like any other cost. A well-run company will not let them get out of line with those of the competition.

    • 0 avatar
      mikey

      Your close, geeber,here in Canada the salary retirees have a class action law suit brewing.

      The hourly were not totally unscathed. In the 16 months I’ve been retired I’ve seen,my pension froze for the next 5 years. Also the deduct on my drugs jumped from 35 cents to 10%, and we also went to Co pay on benifits.

      Yeah.. I’ve talked to some of the salary retirees,and they do have a beef. My neighbor is a salary retiree,and we have had some good laughs over a few beers. He would be the first to admit they should have gone CAW when they had the chance.

      They didn’t, and are now paying a big price.

  • avatar
    Tommy Boy

    The UAW is a burden far beyond hourly costs alone. The prepackaged “bankruptcy restructuring” left the UAW pretty untouched thanks to political interference by the Obama administration.

    So you’ve still go work rules, featherbedding, pensions and the UAW mindset / intransigence.

    GM and Chrysler (and Ford) are still dead companies walking, and will be so long as the UAW is on the premises. The Obama administration used billions of taxpayers dollars to buy the UAW some more time, but it’s still the same old UAW.

    • 0 avatar
      ihatetrees

      So you’ve still go work rules, featherbedding, pensions and the UAW mindset / intransigence.

      +1. Having worked in both union and non-union firms, the union attitude is often, in itself, a significant cost.

  • avatar
    HerrKaLeun

    I’m an engineer and have a Masters degree and make less than one of the assembly line workers average mentioned here. I also do manage multiple projects each of up to a million $. So I do think they make too much money considering a high school degree is all they have to obtain on their own and don’t have actual responsibility (when they call in sick, someone else picks up like nothing happened). I actually think I’m doing OK. But compared to assembly line workers… now I want more money!! :-)

    • 0 avatar
      psarhjinian

      You know what? I’ve done plant-floor duty, and I’ve do white-collar now, backed by a fair bit of education.

      The assembly-line guys deserve every cent they get, and I’d rather do my job than theirs.

  • avatar
    Greg Locock

    “Salaried workers at the Detroit automakers made $122,963; at foreign competitors, they made $81,506.”

    I suspect they are not comparing apples to apples. Assembly plant engineers tend to be heavily weighted towards manufacturing and procurement, which tend to be less well paid (more junior staff) than engineering jobs in product development and head office. If you were to include the head office/PD salaries for the transplants back in the home country the numbers would shift dramatically.

  • avatar
    AJ

    I sure hope some non-union burdened company ends up with the Jeep brand, so I can afford to buy a new one again. Yeah, I also want a raise! (lol)

  • avatar
    mythicalprogrammer

    Shrug, USA labor cost more but it’s less competitive to their foreign counterparts. I’m glad it’s somewhat competitive now suck for their benefits though. But what’s funny is USA CEOs get paid so much more than their foreign counterparts and yet they ran the company to the ground. It should be at least tie into their company performance, like how the Government is forcing a percentage of their pay is through stocks. Ha! You want those money you better get the company running well.

  • avatar
    obbop

    Productivity and pay do not go hand-in-hand… especially if you are at the wider part of the socio-economic pyramid.

    So why should we bust out butts when the rewards are not doled out to us?

    Perhaps my people’s time and efforts should be devoted to converting plowshares into spears.

  • avatar
    Tommy Boy

    As I said, so long as GM / Ford / Chrysler still have the UAW on the premises they are dead companies walking. Check this out from The Detroit News — the UAW hasn’t changed, so after tens of billions of taxpayer dollars the cycle is about to repeat, and our billions will have been flushed down a union rat-hole:

    UAW’s King: Auto workers deserve fairness

    http://detnews.com/article/20100511/AUTO01/5110408/1148/UAW-s-King–Auto-workers-deserve-fairness

    • 0 avatar
      windswords

      Interesting article.

      “King noted that automakers and suppliers’ “profitability is going to be astronomical” if the market continues to rebound and return to 16 million units in annual sales.”

      What is he smoking? It will be years before we get back to 16 million. And, is he assuming that the D3 will build the same percentage of that 16 million as they did before?

      “King is expected to succeed Ron Gettelfinger, who is retiring, as the next UAW president at the union’s convention in mid-June.”

      So, King will be the new king.

      “King also criticized Toyota for moving work out of the U.S. and back to Japan and other nations. In 2000, about half of Toyota’s products sold in the United States were made by American workers, he said.”

      Ok, I will forever bring this up when one of you hauls out the false argument about “Toyota builds in the US and the Fusion is made in Mexico” or “the 300 is built in Canada”. You think it’s any different with Honda? Nissan? Subaru? Mazda? You think just because Hyundai and Mercedes build one (1) plant in Alabama that they make all the vehicles they sell here in the US?

      “That’s going to drop below 40 percent. That’s wrong,” King said.

      No Mr. King. It’s either a good or bad BUSINESS decision. Morality has nothing to do with it.

      ‘”They are supposed to be environmentally friendly. That’s anti-environment.” ‘

      WTH? This guy is as clueless as Ron Middlefinger.

  • avatar
    gimmeamanual

    There was a guy on here a while back that used to show that GM already spent a bit less than Toyota to build a comparable car (Malibu vs Camry), but GM’s average transaction prices were WAY lower.

  • avatar

    That’s pretty hypocritical considering some GM parts, and even their cars aren’t made in the USA. Chevy Aveo, anyone? Suzuki/Daewoo econobox much?


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