Detroit automakers are paying the same amount as foreign companies

Article by Christian Andrei, on August 29, 2010

The Detroit automakers are now paying their workers the same amount as their counterparts in foreign companies, and this could actually pose a labor cost advantage within the next few years, according to an economist with the Center for Automotive Research.

Sean McAlinden said that mainly due to a $950 charge for retiree health care coverage, General Motors in 2007 was paying $1,400 more per vehicle than Toyota for labor costs in North America.

Later that year, labor negotiations reduced costs and moved the responsibility for retiree health care to a trust run by the UAW. The union entered a deal to cut the wages in half for new hires (to about $14 an hour).

It also agreed to reduce their pension and health benefits. Prior to GM and Chrysler Group LLC going into bankruptcy, workers agreed to more concessions, including reduced overtime and cost-of-living adjustments and the abolition of a jobs bank that paid workers who were laid off.

On the other hand, Ford Motor Co., which was the only one of the Detroit Three to not become bankrupt, was unable to convince its workers to match those concessions.

McAlinden noted that by 2008, the hourly workers of the Detroit automakers were paid an average of $69,368 per year, while those of the largest foreign-based car firms were paid $70,185.

The differences were bigger for salaried employees. Those from Detroit automakers made $122,963 while those from foreign firms made $81,506.[via autonews - sub. required]

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