Ford cancels Focus Active import plans due to China tariffs
Lexus Fanatic
Joined: Nov 2011
Posts: 35,438
Likes: 372
From: ON/NY
Neither comes anywhere near answering the question of why Toyota, Hyundai, Honda, etc can profitably build huge swaths of their US lineup in the states, but Ford can't. Obviously the fact that Ford's average labor rate is $60 an hour, or $125k/year--more than my fully loaded cost (including benefits) for highly-skilled, well-educated network engineers with 20+ years of experience--has nothing to do with it.
Last edited by Toys4RJill; Sep 6, 2018 at 07:09 AM.
Lexus Champion
Joined: Oct 2002
Posts: 11,204
Likes: 11
From: The Woodlands, TX
Neither comes anywhere near answering the question of why Toyota, Hyundai, Honda, etc can profitably build huge swaths of their US lineup in the states, but Ford can't. Obviously the fact that Ford's average labor rate is $60 an hour, or $125k/year--more than my fully loaded cost (including benefits) for highly-skilled, well-educated network engineers with 20+ years of experience--has nothing to do with it.
take the infamous “jobs bank”: surplus workers, rather than getting laid off, would receive 95% of their full salaries plus benefits while the company waited to reassign them. But instead of being temporarily idle, thousands of “bankers” would be there for months, if not years, while they watched movies, solved crosswords, and just passed the time. Some senior employees would even pull strings to get “laid off” so they could finish their remaining few years “working” in the bank before retiring with full benefits.
Lexus Champion
Joined: Feb 2011
Posts: 3,309
Likes: 31
From: Canada
Much of the comparison in labour costs came out a decade ago, during the bailout of GM and Chrysler. The studies showed that unionized workers at GM, Ford and Chrysler were, in fact, paid about equal to what non-unionized workers at Toyota were paid, about $30/hr. The fully-loaded labour costs were $69 for the GM worker but only $48 for the Toyota.
Source
I don't know what accounts for the difference in fully-loaded costs but my educated guess would be pension costs. GM, Ford and Chrysler have higher pension costs, mainly due to the fact that they have been around much longer than transplants like Toyota, Honda and Nissan, and so have many, many more retired workers to take care of. And because the Detroit 3's workers have long been unionized, they have been able to successfully negotiate healthy pensions.
But labour costs are not the only difference between the older, American automakers and the transplants. The transplants are largely operating in the previously less-developed areas of the USA, where they were enticed to set up shop with highly subsidized land, factories and infrastructure costs. And their new factories, with the latest in technology, costs less to operate than the much older (some century-old) factories of the American automakers.
The transplant automakers have a number of advantages (not all of their own making) over the American automakers.
Lexus Champion
Joined: Oct 2002
Posts: 11,204
Likes: 11
From: The Woodlands, TX
from 2015....
https://www.autoblog.com/2015/03/29/...kers-wage-gap/
As leaders for the United Auto Workers gather in Detroit for their Special Convention on Collective Bargaining to work out the negotiating stance for this year's new labor agreements with the Detroit 3 automakers, what they most want to do is figure out how to eliminate the two-tier wage scale. However, the lower Tier 2 wage has allowed the domestic automakers to reduce their labor costs, hire more workers, and compete better with their import competition. As it stands, per-hour labor rates including benefits are $58 at General Motors, $57 at Ford, and $48 at Fiat-Chrysler – a reflection of FCA's much greater number of Tier 2 workers.
The Center for Automotive Research released a study of labor rates (including benefits) that put numbers to what the imports pay: Mercedes-Benz pays the most, at an average of $65 per hour, Volkswagen pays the least, at $38 per hour, and BMW is just a hair above that at $39 per hour. Among the Detroit competitors, Honda workers earn an average of $49 per hour, at Toyota it's $48 per hour, Nissan is $42 per hour, and Hyundai-Kia pays $41 per hour. The lower import wages are aided by their greater use of temporary workers compared to the domestics. Automotive News says the ten-dollar gap between those foreign camakers and the domestics turns out to about an extra $250 per car in labor, which adds up quickly when you're pumping out many millions of cars.
That $250-per-car number is one that, come negotiating time, the Detroit 3 will want to reduce, as the UAW is trying to raise both Tier 1 and Tier 2 wages. Another wrinkle is that the domestic carmakers are considering the wide adoption of a third wage level lower than Tier 2. Some workers who do minor tasks like assembling parts trays kits and battery packs already make less than Tier 2, but the UAW will be quite wary about cementing yet another wage scale at the bottom of the system while it's trying to fight a bigger battle at the top.
The Center for Automotive Research released a study of labor rates (including benefits) that put numbers to what the imports pay: Mercedes-Benz pays the most, at an average of $65 per hour, Volkswagen pays the least, at $38 per hour, and BMW is just a hair above that at $39 per hour. Among the Detroit competitors, Honda workers earn an average of $49 per hour, at Toyota it's $48 per hour, Nissan is $42 per hour, and Hyundai-Kia pays $41 per hour. The lower import wages are aided by their greater use of temporary workers compared to the domestics. Automotive News says the ten-dollar gap between those foreign camakers and the domestics turns out to about an extra $250 per car in labor, which adds up quickly when you're pumping out many millions of cars.
That $250-per-car number is one that, come negotiating time, the Detroit 3 will want to reduce, as the UAW is trying to raise both Tier 1 and Tier 2 wages. Another wrinkle is that the domestic carmakers are considering the wide adoption of a third wage level lower than Tier 2. Some workers who do minor tasks like assembling parts trays kits and battery packs already make less than Tier 2, but the UAW will be quite wary about cementing yet another wage scale at the bottom of the system while it's trying to fight a bigger battle at the top.
Lexus Champion
Joined: Oct 2002
Posts: 11,204
Likes: 11
From: The Woodlands, TX
I don't know what accounts for the difference in fully-loaded costs but my educated guess would be pension costs. GM, Ford and Chrysler have higher pension costs, mainly due to the fact that they have been around much longer than transplants like Toyota, Honda and Nissan, and so have many, many more retired workers to take care of. And because the Detroit 3's workers have long been unionized, they have been able to successfully negotiate healthy pensions.
Lexus Fanatic
Joined: Nov 2011
Posts: 35,438
Likes: 372
From: ON/NY
Both numbers may be correct: $40 hourly wage, paid to the worker, and $60/hr fully-loaded, taking into account benefits (health care) and pensions.
Much of the comparison in labour costs came out a decade ago, during the bailout of GM and Chrysler. The studies showed that unionized workers at GM, Ford and Chrysler were, in fact, paid about equal to what non-unionized workers at Toyota were paid, about $30/hr. The fully-loaded labour costs were $69 for the GM worker but only $48 for the Toyota.
Source
I don't know what accounts for the difference in fully-loaded costs but my educated guess would be pension costs. GM, Ford and Chrysler have higher pension costs, mainly due to the fact that they have been around much longer than transplants like Toyota, Honda and Nissan, and so have many, many more retired workers to take care of. And because the Detroit 3's workers have long been unionized, they have been able to successfully negotiate healthy pensions.
But labour costs are not the only difference between the older, American automakers and the transplants. The transplants are largely operating in the previously less-developed areas of the USA, where they were enticed to set up shop with highly subsidized land, factories and infrastructure costs. And their new factories, with the latest in technology, costs less to operate than the much older (some century-old) factories of the American automakers.
The transplant automakers have a number of advantages (not all of their own making) over the American automakers.
Much of the comparison in labour costs came out a decade ago, during the bailout of GM and Chrysler. The studies showed that unionized workers at GM, Ford and Chrysler were, in fact, paid about equal to what non-unionized workers at Toyota were paid, about $30/hr. The fully-loaded labour costs were $69 for the GM worker but only $48 for the Toyota.
Source
I don't know what accounts for the difference in fully-loaded costs but my educated guess would be pension costs. GM, Ford and Chrysler have higher pension costs, mainly due to the fact that they have been around much longer than transplants like Toyota, Honda and Nissan, and so have many, many more retired workers to take care of. And because the Detroit 3's workers have long been unionized, they have been able to successfully negotiate healthy pensions.
But labour costs are not the only difference between the older, American automakers and the transplants. The transplants are largely operating in the previously less-developed areas of the USA, where they were enticed to set up shop with highly subsidized land, factories and infrastructure costs. And their new factories, with the latest in technology, costs less to operate than the much older (some century-old) factories of the American automakers.
The transplant automakers have a number of advantages (not all of their own making) over the American automakers.
Lexus Fanatic
Joined: Oct 2003
Posts: 94,422
Likes: 249
From: Virginia/D.C. suburbs
ahh yes.....the so-called “thirty and out” rule allowing union workers to retire with full pensions and health care benefits after thirty years of work. A worker might be able to retire in his early 50s and collect an annual pension of $37,500, paid wholly by GM. By 2008 there were 4.6 retired GM employees for each active worker.
Indeed, throughout the Rust Belt, if that policy were still in effect today, a lot of people wouldn't be living in the poverty they are, cities wouldn't be crumbling, there would be a much better tax-base among the population for government services, crime would be lower because people wouldn't have to steal for money, people wouldn't be dying from opioid-overdoses because, with insurance, they could afford to go see a doctor and get safer pain-medication, and a lot more new cars would be sold because people could actually afford new ones instead of driving old pickups and clunkers.
Last edited by mmarshall; Sep 6, 2018 at 04:15 PM.
Lexus Fanatic
Joined: Oct 2003
Posts: 94,422
Likes: 249
From: Virginia/D.C. suburbs
IMO, that goes beyond politics. I don't see it as a left/right issue, but of simple justice for those who gave decades of their life to an employer, company, or in public service. Indeed, in some ways, the people in the plants, mines, and mills have earned it more than I did, because, while I worked with a lot of stress and pressure, I never had to suffer factory or job-related injuries.
Last edited by mmarshall; Sep 6, 2018 at 04:24 PM.
Lexus Fanatic
Joined: Nov 2011
Posts: 35,438
Likes: 372
From: ON/NY
Indeed, throughout the Rust Belt, if that policy were still in effect today, a lot of people wouldn't be living in the poverty they are, cities wouldn't be crumbling, there would be a much better tax-base among the population for government services, crime would be lower because people wouldn't have to steal for money, people wouldn't be dying from opioid-overdoses because, with insurance, they could afford to go see a doctor and get safer pain-medication, and a lot more new cars would be sold because people could actually afford new ones instead of driving old pickups and clunkers.
Lexus Fanatic
Joined: Oct 2003
Posts: 94,422
Likes: 249
From: Virginia/D.C. suburbs
Well, in Toronto, you're on the Northern edge of the Rust Belt. Conditions on the Canadian side of the border, though where Toronto is, are somewhat different than in the U.S., for several reasons. More workers, for example, retire with heath insurance (government-provided)...but their waits for care and appointments can be longer.
To some extent, Social Security, in the U.S., provides at least some pension-like income after retirement, but sometimes it is difficult to try and live on it....and you usually can't collect it before you are well into your 60s.
Last edited by mmarshall; Sep 6, 2018 at 04:36 PM.
Lexus Fanatic
Joined: Nov 2011
Posts: 35,438
Likes: 372
From: ON/NY
Well, in Toronto, you're on the Northern edge of the Rust Belt. Conditions on the Canadian side of the border, though where Toronto is, are somewhat different than in the U.S., for several reasons. More workers, for example, retire with heath insurance (government-provided)...but their waits for care and appointments can be longer.
To some extent, Social Security, in the U.S., provides at least some pension-like income after retirement, but sometimes it is difficult to try and live on it.
Lexus Fanatic
Joined: Nov 2011
Posts: 35,438
Likes: 372
From: ON/NY
Lexus Fanatic
Joined: Oct 2003
Posts: 94,422
Likes: 249
From: Virginia/D.C. suburbs