The Truth About Cars » two tier wages The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 18:25:17 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » two tier wages U.S. Car Exports to Hit Record 2 Million, Half From Domestic Brands Fri, 27 Dec 2013 12:00:01 +0000 Fords are loaded for export at the Port of Baltimore. Photo: Bill McAllen / Port of Baltimore

Fords are loaded for export at the Port of Baltimore. Photo: Bill McAllen / Port of Baltimore

When most people think about countries that export cars one name that’s usually not on their list is the United States, but the U.S. is exporting more cars than ever. According to the Detroit News, the record total this year is likely to reach 2 million units and perhaps even more surprising than that number if the fact that half of the exports are cars made by GM, Ford and Chrysler. The remainder come from assembly plants located in the U.S. owned by German, Japanese and Korean automakers. Cars are the most valuable manufacturing export from the U.S., followed by aerospace. Spurring the growth in exports is the fact that the United States is currently one of the less expensive places to build a car, due to favorable currency exchange rates and reduced labor costs.

According to the United States Commerce Dept., last year’s automotive exports totaled $132.7 billion on approximately 1.8 million exported cars and trucks. The automotive trade deficit is still more than $100 billion with car imports grossly outweighing exports, but that deficit has been shrinking.

As would be expected, about half of U.S. automotive exports are to neighboring Canada and Mexico but the biggest growth is coming from outside of North America. Less than 10 years ago shipments to Mexico and Canada accounted for 80% of all U.S. vehicle exports. Now that figure is down to 49% and it continues to fall. Shipments to China have grown almost 600% since 2009 and one in nine vehicles exported from the U.S. now goes to China. Chrysler exports Jeeps there and next year Ford will being exporting Lincolns to China starting late next year.

Analysts say that U.S. car exports will likely not fall off as the Big 3 and their global competitors add more capacity inside China. That is because other markets in Latin American, Africa and the Mideast will continue to see increased demand for U.S. built cars and trucks. Still, the fastest growing markets, the so-called BRIC countries of Brazil, Russia, India and China, are where car companies are building factories, following Isaac Singer and Henry Ford’s philosophy of “build where you sell”, so there may be a limit on export growth here in the U.S.

In addition to the domestics, Honda and Toyota both want to boost exports from the U.S. Honda wants all of its global regions to be export hubs, shipping 20-30% of their production out of their local markets. Honda says that its eventual goal is to export more cars from the U.S. than it’s importing here from Japan. Toyota recently added the Highlander to the its list of vehicles exported from its assembly operation in the U.S.

Most of the cars and trucks exported from the U.S. are models that are also sold here. Ford’s F-150, built in Dearborn, Michigan and Kansas City, Missouri, is exported to 49 countries. Joining Ford’s flagship pickup truck overseas will be the all-new 2015 Mustang. The new Mustang was designed specifically with export markets in mind, that is one reason why the car will over a turbocharged four cylinder engine. The Mustang is built in Flat Rock, Michigan and the assembly line there will also produce right hand drive versions for the UK, Australia and Japan.

Also built in the Detroit area specifically for export is the Opel Ampera, Opel’s version of the Chevy Volt, which is assembled at GM’s Detroit-Hamtramck plant.

During the restructuring of the U.S. auto industry, in 2009 the United Auto Workers agreed to a two-tier wage system, with new hires making a little more than half of what veteran autoworkers make. Those agreements have secured the assignment of lots of production to the North American facilities operated by the domestic car companies. Those companies have also earmarked billions of dollars in upgrading existing U.S. plants to increase production.

While their assembly plants in the U.S. don’t use UAW labor, the strength of the Japanese currency, the yen, relative to the U.S. dollar, has made the U.S. a more attractive place for Japanese automakers to build their cars than back home.

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UAW Wants to End Two-Tier Wages in Next Contract Wed, 18 Dec 2013 12:00:57 +0000 DetNews Photo

Norwood Jewell, a nominee to become a UAW vice-president, said that the autoworkers want to eliminate the two-tier wage system that pays new hires at a lower rate than higher seniority workers. The wage system was agreed to by the union to help the domestic automakers as they went through financial troubles when the economy turned down in 2007. New workers are paid slightly more than half of what veteran autoworkers earn.

“The international executive board hates two-tiers,” Jewell told Automotive News at a General Motors Co plant in Flint, Mich.  as the automaker was announcing $1.3 billion in investments in some of its plants in the U.S. midwest, mostly in Michigan. Jewell is currently director of UAW’s Flint region. “We didn’t do two tiers because it’s a wonderful thing,” he said, explaining that the financial circumstances six years ago more or less forced the two tier wages on the union. “We hate them. We intend to eliminate them over time.”

Current UAW contracts with GM, Ford and Chrysler expire in 2015. The union’s resentment of the current two level wage structure combined with strong profits at all three domestic automakers in recent years along with the fact that higher tier workers haven’t gotten a pay raise in ten years means that negotiations on the new contract will be difficult.

The car companies say that the lower tier entry level wages are necessary for them to be able to compete on labor costs with the transplant assembly plants operated by German, Japanese and Korean automakers. New hires start at just under $16/hr, rising over time to over $19/hr. Veteran workers make about $28/hr.

Jewell said that a key tactic in eliminating the two-tier wages will be the unions organizing those non-union transplant facilities, mostly located in the southern U.S. “If we don’t organize them and bring them up to our standard, we’re never going be able to totally eliminate the second tier,” he said.

Jewell also said that the companies’ profits will help the union make its case when contract talks are opened.

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