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Sunday, November 16, 2008

Automotive Industry Bailout? The UAW Should Bail Out!

We have the UAW to thank for the decreasing revenues of the Big 3 U.S. automakers. Some illiterate Bozo pushing a broom in a Detroit auto plant is making $20+ per hour! Here's a breakdown of actual labor costs per hour at the Big 3, this is for hourly workers only, and does not include extremely overcompensated white-collar salaries -

Labor cost per hour, wages and benefits for hourly workers, 2006. (Correction to the below information: I have just discovered on Nov 19, 2008 that, since 2006, the average laborer's compensation package for American owned automobile manufacturers has increased to slightly over $81 per hour! Therefore the following figures for the "Big 3" are about 12% low.)

Ford: $70.51 ($141,020 per year)

GM: $73.26 ($146,520 per year)

Chrysler: $75.86 ($151,720 per year)

Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
(source: Forbes)

Is it any wonder that American auto manufacturers cannot compete in the open market? They're being strangled by labor costs! That, coupled with the fact that, across the board, Chrysler, Ford and GM produce an inferior product, when compared to the quality and durability of competing Japanese imports.

As credit availability has tightened - to the point that it should always have maintained - consumer spending has slowed to a crawl. As a result, major U.S. automakers have seen their profits fall. Severe adjustments must be made in order to bring this industry back from the brink of extinction.

1. American auto manufacturers must return to the business of building a durable product. It seems that competitors in foreign countries produce products that can last for years with little need for maintenance. Many American made vehicles often have major mechanical problems within the first year or two of usage. In order to remain competitive in an emerging global market, the auto industry must produce vehicles that are more reliable and can attain optimum gas mileage.

2. Our auto industry must not continue to give in to the crushing demands of the auto workers union. A key advantage that foreign auto makers have is they do not have to pay outlandish wages and benefits when they can simply expand or relocate to areas that do not bow to union pressures. Foreign auto makers have consistently surpassed their American counterparts in production and profitability. It is now time that the auto behemoths stand up to the unions and demand their employees work for a fair wage and competitive benefits without jeopardizing the life of the company. How does it profit the unemployed worker to say, "I used to work for Chrysler (or Ford, or GM) when they were in business." Or the underemployed worker to ask, "Would you like fries with that, sir?"

3. They need to control spending at all levels of the corporation. Many auto executives revel in lavish luxury compensation packages, fail-safe "Golden Parachutes," and outlandish bonus incentives. The only people deserving of a Golden Parachute are those who save a failing corporation, not those who failed to save it! This is true for ALL industries, not just automotive.

The average UAW worker with a high school diploma earns 57.6% more total compensation than the average university professor with a PhD (who earns about $93,000 per year), and 52.6% more than the average worker at Toyota, Honda or Nissan.

The true bailout won't come about until the UAW either renegotiates the contracts to a reasonable level of compensation, or the UAW is eliminated as the bargaining entity for those employed within the automotive manufacturing industry.

I could be wrong .............................. but I'm NOT!

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