Detroit 3 Closing Worker Pay Gap with Foreign Competitors

Sean McAlinden, an economist working for the Center for Automotive Research, says that due to shifts in UAW retiree / health planning US auto manufacturers may end up with a labor-cost advantage in the next few years. GM is used as the prime example.

Detroit 3 2 Detroit 3 Closing Worker Pay Gap with Foreign CompetitorsHere’s a look at the timeline:

In 2007, per-vehicle labor costs for GM were $1,400 more than Toyota, its largest international competitor. $950 of that was for retiree benefits.

In 2008, Detroit’s Big 3 manufacturers (Ford, GM and Chrysler LLC) were reportedly paying their hourly employees $69,368 per year on average versus $70,185 being earned by employees at foreign-owned plants. Salaried employees at the Detroit automakers were making $122,963 versus $81,506 earned by foreign-based counterparts.

Now, after all the re-negotiations, GM is working towards a new goal: “[hiring] more workers at the lower wage and it [hiring] fewer skilled-trades workers, who make more money than other factory workers”.

With 2,300 new employees working under the revised wage/retirement plans, GM’s employees are only $2 more costly than Toyota’s. McAlinden predicts that over the next 5 years, GM may even undercut Toyota’s pay by up to $10.

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