Who else laughed out loud when Congress asked the auto execs who flew commerical or who flew in on their private jets to Washington? I know I did.
Don from TAKE TWO posts some good thoughts on what the heck is wrong with the Auto Industry: "Detroit will tell you that their problems stem from the global credit crisis. Nothing could be further from the truth. This is merely the last straw in a 10+ year decline in the industry that has been brough on by two things: lack of innovation and out of control labor costs."
He's right, it's that simple. The pay of the top executives shouldnt be the main issue. Sure that will stop the bleeding some what. But once executive or 50 employees working at a JOB BANK, well you do the math. It's both sides of the coin.
What Michiganders fail to recognize is that while everyone and their brother gets a discount for cars around here, that is not the case around the country. Prices around the country have American cars virtually the same as Foriegn cars in price. The difference? Most likely Health Benefits. Who pays for that???
From Forbes:
Labor cost per hour wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 year)
GM: $73.26 ($146,520 year)
Chrysler: $75.86 ($151,720 year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
The average annual compensation for a college professor in 2006 was $92,000+ .
Summary: The average UAW worker with a high school degree earns 57 more compensation than the average university professor with a PhD.
Something is fishy in the Motor City.
What's the solution?
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Blaming everything on the unions has been the big 3 tactic for over 30 years. That $92,000 for your college professor is salary not total benefits. You are comparing apples to Bentleys.
ReplyDeleteWhy do the the big 3 pay more for benefits than they pay for steel? Because the idiots provide ridiculous health care benefits for retired workers. Not only retired union workers, but also hundreds of thousands of white collar workers.
If these people only had Medicare they would still have better health insurance than half the people in this country.
The big 3 has wasted billions on a practice that should have been stopped 20 years ago. They had the threat of strikes by cutting retiree benefits for UAW workers, but faced little or no consequences for cutting it for the retired white collar workers, and the UAW would have eventually caved in.
Reason # 2
Engineering. The big 3 has a practice of hiring the best engineers. Toyota uses the approach of requiring all of their suppliers to provide them with ideas for innovations. What does that mean?
Say GM employees the 5,000 best automotive engineers in the world and they each have 3 great ideas every year. That is 150,000 great ideas every 10 years.
The engineers that Toyota gets ideas from aren't nearly as good they have 1 good idea every 2 years. There are however 100,000 of them. So Toyota gets 500,000 good ideas every 10 years and spends billions less for those ideas.
Its not all the fault of the unions.
-The Frankenator
You cant blame everything on the unions and I'm not...they are what they are. The Job Bank though, is a JOKE. But they are going to have to give now. Even if it was mis management.
ReplyDeleteIn both cases, unchecked greed has caused this mess, and poor business practices.
Yes benefits is a HUGE problem.