Ooops, Canada: Detroit 3 Say Production In Canada Way Too Expensive
Contracts talks between the Canadian Auto Workers and the Detroit 3 won’t start before August. But combattants are already lobbing grenades across the border. Ford of Canada told Reuters that Canada is now the most expensive place in the world to make cars.
“Right now, labor costs are higher in Canada than at any other Ford operation in the world,” Ford Canada spokeswoman Lauren More declared vis-à-vis Reuters. “When it comes to future investment, labor costs are one of the most important considerations. The 2012 agreement has the potential to either improve or erode Canada’s labor cost competitive position.”
Tough talk, and it is likely to get tougher. The parties have no common ground. Carmakers want lower cost. Unions want a share of the big profits that have been announced.
Said Ken Lewenza, president of the CAW:
“I think talks are going to be incredibly tough. The companies are being strong in their public comments. We are being equally strong.”
Including benefits, the CAW’s total average labor cost in U.S. dollars is about $60 an hour, says Reuters. “That compares with $58 for U.S. workers at Ford, $56 for General Motors and about $52 at Chrysler.”
A lot of this is created by the strong Canadian dollar. Production in Canada looked like a bargain when, a few years ago, the buck bought a loonie and 30. Now as the CAD is on the march towards parity with the greenback, that calculation doesn’t look so good.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Does anyone really know what the big 3 base their $60 an hour rate on. Is it the mythical employee who racks up the max in dental, drug and health benefits, sits in the job bank for the max time, lives to draw his pension till 110, goes on disability as soon as he has his 90 days, well you get the idea. Does the cost per hour in the US take into account health care coverage costs?
Aw, Hell, all this is just posturing. Posturing on the part of the employers and posturing on the part of the union(s). Different go'round, same song and dance. In the end the CAW will get their wish and share in the profits. However, as with the UAW, if there are no profits, the union(s) will still get their share of the profits, even if it drives their employers into bankruptcy. Once bankrupt, the taxpayers and the omnipotent governments will be there to bail out the unions and their failed employers. It's happened before. The precedent has already been set. It will happen again. The more things change, the more they stay the same. Vuja De, all over again....
Canada joins Japan in becoming one of the costliest places to assemble cars. Automakers should be allowed to move production as they please. They need to be looking after themselves and provide the best bang for the buck for their customers. $10 an hour for a Indian worker vs $60 an hour for a Canadian worker could get you standard alloys, standard all wheel disc brakes, power locks and power windows for the same cost. Det 3 should join forces and build a mega assembly plant in some developing nation, with enough capacity to take over production on a moments notice and keep it on standby. If the unions decide to play hardball, the Det 3 can tell em to go suck on a rock. Most people could care less about where their next car is built if the quality is on par.
Swiss Delegate: Ahhh, ven you say "Canada is on strike," what exactly do you mean? Stephen Abootman: What do you think it means? [pounds the table] Stephen Abootman: We're striking, buddy! No more! That's it! Until we get what we want. French Delegate: Who are you exactly to authorize this strike? Stephen Abootman: I'm Stephen Abootman! Leader of the WGA! French Delegate: The WGA? Stephen Abootman: [crosses his arms] Yes! The World Canadian Bureau! [the other delegates don't react] French Delegate: What exactly does Canada want? Stephen Abootman: We want: more... money! Aide 1: [with mustache] Yeah! More money! Japanese Delegate: More money from where? Stephen Abootman: Just more money! You know! Canada doesn't get enough money! Other countries have lots of money; we want, we want some of that money! Hu- how about- the Internet? The Internet makes lots of money! So give us some of that money! Aide 1: Yeah! Give us Internet money! British Delegate: A Mister A- Abootman, you seem to- not understand how... global economics works. I think that... Stephen Abootman: Don't give me that fat-cat fancy lip-wiggling! Are you gonna give Canada more money or what? [pounds his fist on the table a few times] British Delegate: I'm afraid we can't. Stephen Abootman: Then you leave Canada no choice. [heads for the doors. His aides open them and he heads out] Stephen Abootman: This strike shall continue!