CanPol(?) - CAW doesn't see the train coming

[DanS]

And here's a WSJ editorial that puts the blended transplant wage at $44 in December '08.

http://online.wsj.com/article/SB122809320261867867.html

[DanS]

It was a boom time, but I don't think the autoworker wages followed suit. My brother-in-law works at a UAW plant (not Big 3) and has had frozen wages and benefit reductions for several years running. He used to be paid based on a Big 3 wage that was 30% more than his. But that arrangement has broken, as I understand.

Perhaps the transplants have followed suit, given that the union wages are falling and therefore there's not as much wage pressure for them.

[KrazyHorse]

Anyhow, Dan: It seems pretty obvious that when you apply the exchange rate, the two labor costs (of foreign companies) are similar.



Chrysler has no particular reason to dump Canadian manufacturing (unless the CAW actually refuses to play ball).

Though I wish Chrysler would dump us. That way we could stop giving them money.

[DanS]

Well, $3 or $4 US/hr isn't anything to sniff at. Not huge, but worth looking at.

[KrazyHorse]

CAW generally follows UAW lead, btw. The labor contracts end up being broadly similar.

[DanS]

It looks to me like it's mostly out of the UAW's hands now. They still can set the Ford contract, but GM/Chrysler have the US Government involved and will have the bankruptcy courts involved. Would the CAW follow a contract that is influenced so heavily by those two entities?

[KrazyHorse]

They won't have a choice, unless they're stupider than they look (which is difficult)

[KrazyHorse]

Might grumble a bit (as they're doing now) but I can't see them NOT taking a big fat bite of the **** sandwich here.

[DanS]

I wouldn't put irrational actions past any of the unions based on what I've seen. They've done their best to kill Detroit with nary a word of self-reflection.

[Ben Kenobi]

DanS:

Their "asks" were: 1. That labour costs be reduced to a level equal to those of Toyota Canada. We believe that a Canadian benchmark is the appropriate one for you to achieve.

Interesting they just name Toyota. I would have thought they would do the same as in the US. The reason for selecting the higher Toyota standard is because the Feds don't believe that GM can meet the target price wrt to benefits. They want to lock-in a higher Canadian wage.

The problem is that it has just the inverse effect, as you've noted in that it makes Canadian workers more expensive then Americans.

2. That Chrysler complete an alliance with Fiat that, in return for equity participation gives Chrysler access to Fiat management, Fiat technology, Fiat sales and distribution outside of NAFTA, and distribution of Fiat products inside NAFTA.

Surprised not to see any mention of this clause. Seems pretty commonsense to me. If Fiat can help GMC at all, then they need to have a true partnership. Seems the relationship is all one way, Fiat trying to take the best they can out of GMC while not returning anything of true value, except cash. I wonder if this is a desire up here to hamstring Fiat.

That Chrysler and Fiat commit to maintain Canada's proportion of North American production and to invest over the medium term that same share of total capital investment and R&D expenditure in Canada.

Wow. This is a killer. Chrysler needs to cut production of poorly performing models. They are going to lose marketshare. You cannot force them to keep production, just because it keeps people employed.

I'm also appalled at some of these coverages.

Some specific examples include: Prescription drug dispensing fees, by eliminating the cap results in estimated savings of $2.16 per hour.

DanS, drugs and prescriptions usually aren't covered by our healthcare. This is why this is probably the single biggest perk, not only for GM employees, but for retired GM workers. This BTW, doesn't exist anywhere else. This is platinum, top of the line coverage.

Elimination of out-of-province health care coverage (snowbirds), with employees and retirees assuming responsibility for any coverage results in a cost savings of $1.00 per hour.

Now, I hope you are keeping your eyes on this DanS. GM is paying so that GM workers can get health care in the US. Say you are a GM worker and want to retire to Florida? GM here in Canada will pay your American health care costs out of pocket. This is a ridiculous perk.

The change from semi-private hospital room coverage to "ward" coverage saves an estimated $0.97 per hour.

What this means is that GM gets to ensure that anyone with their coverage has a room to themselves rather then being stuck in a ward. It amazes me that they are paying for extra coverage, when the difference is a wall or a sheet.

Elimination of life insurance for current and future employees results in a cost savings of $1.54 per hour.

Uh, life insurance. I've never heard of any company paying for life insurance for all their employees.

The elimination of non-traditional benefits such as child care, legal services, tuition reimbursement, dependant scholarships and extended health care coverage (chiropractic services, massage therapy, naturopath, orthotics, etc.) results in a cost savings of $0.73 per hour.

Really? They can get massages on the company dime? No wonder GMC is going bankrupt! They should advertise their perks so that the common worker understands what they are getting. Geez, you could work for nothing and probably still be taxed at 30k just for these benefits.

This is probably the best thing the company good do is to out the union on exactly what benefits they do get. I'm shocked. No wonder people are so dependent on GM. GM does everything for them!

[Wezil]

Hey Ben. We're talking about Chrysler not GM.

[Asher]

He's so wrong on everything, it's incredible.

Life insurance for employees is "unheard of"? It's standard every company I've been at. Massages are also standard at all the companies I work at, up to $300/yr worth. Ditto prescription drugs.

I think it's clear Ben has never had a real job.

[chequita guevara]

http://www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.

The Japanese plants in the US have few retirees, as they were only opened in the 1980s and later.

Meanwhile, Rick Wagoner made $9,500 an hour.

http://www.uaw.org/barg/07fact/fact02.php

In 2006 a typical UAW-represented assembler at GM earned $27.81 per hour of straight-time labor. A typical UAW-represented skilled-trades worker at GM earned $32.32 per hour of straight-time labor.

The total labor cost of a new vehicle produced in the United States is about $2,400,2 which includes direct, indirect and salaried labor for engines, stamping and assembly at the automakers’ plants.

This represents 8.4 percent of the typical $28,4513 price of a new vehicle in 2006.

GM pays it's Opel workers in Germany $41 an hour, not including bennies, and Opel is doing well enough (everyone's hurting in this economy). In fact, Opel is one of the only parts of GM that is profitable. http://www.businessweek.com/magazine...6156_mz037.htm

Now for the money-shot.

http://www.csmonitor.com/2008/1205/p01s04-usec.html

Total benefits put union workers at $36.34 per hour

or about half of what conservatives are claiming.

Non union workers get $25.65 per hour in wages and compensation.

What's killing Detroit is legacy costs, costs incurred by the company a long time ago. If we had universal health care, a lot of those costs would go down.

[DanS]

First off, Che, the Japanese companies have defined payment plans (401(k)s), not defined benefit plans (pensions). And they don't pay retiree health care either. (Very few retirees in the US get health care from their past employers -- I know I certainly don't.) So the gap in costs between the two would not narrow, absent concessions by the UAW.

Also, the UAW in non-Big 3 plants has conceded to 401(k)s. It doesn't make any sense to me that the Big 3 plants should get gold-plated benefits while the non-Big 3 plants don't. It's a whole caste system that includes about 25% less pay for the non-Big 3 UAW plants. I find it distasteful to the extreme and inexplicable, given the problems that the Big 3 are having.

[Ben Kenobi]

Life insurance for employees is "unheard of"? It's standard every company I've been at. Massages are also standard at all the companies I work at, up to $300/yr worth. Ditto prescription drugs.

My dad worked for 25 years at one company, no life insurance through his employer. No massages, no scripts.

Did he not have a 'real' employer?