Filed under: Earnings/Financials
Toyota workers in Kentucky plant made more than UAW members last year
Last year was the first time that non-unionized workers at a foreign-owned assembly plant made more than members of the United Auto Workers union make on average in a year. The Detroit Free Press reveals in a very interesting article that Toyota paid out bonuses of $6,000 to $8,000 last year at its largest U.S. plant in Georgetown, KY. Combined with the base pay made by a non-union worker at the plant, that equates to $30/hour or $60,000/year based on a 2,000-hour work year. That is more than the $27/hour or $54,000 a UAW member made on average last year. Union workers, or course, hardly received any profit sharing bonuses last year due to the poor overall performance of the domestic automakers.
This isn't actually surprising, as a matter of fact it was bound to happen. In many instances, Toyota and other large foreign automakers operating assembly plants in the U.S. pay their workers near-UAW wages in an effort to dissuade them from unionizing. In a year when Toyota's sales have grown to record levels and the domestics are losing market share fast, it was inevitable that Toyota's big bonuses would put the pay of its assembly workers in the U.S. ahead of the UAW, which saw no bonuses last year and likely won't for a few. The lack of overtime hours was another hit to the UAW that dropped the pay for many of its members. In time, as the domestics (if the domestics?) recover and the big bonus checks are in the mail again, we expect the UAW's pay to again top that of any non-union assembly workers in the U.S.
We recommend reading the whole article written by Jason Roberson from the Free Press, as there's a lot of layers to dig through with this story.
[Source: Detroit Free Press]
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Reader Comments (Page 1 of 3)
Lithous 6:04PM (1/31/2007)
"In many instances, Toyota and other large foreign automakers operating assembly plants in the U.S. pay their workers near-UAW wages in an effort to dissuade them from unionizing."
That is correct. A commenter came on here claiming to be a Toyota factory worker and stated that the UAW is trying hard to unionize them (I believe it). It is just insurance so they can keep the UAW and be able to pull out over night like the Colts from Baltimore. Well worth every penny to them for their long term.
How many Toyota assembly workers there will even think that their wages are as they are a lot to do with the UAW and therefore the American car companies (who have had to keep the unions around)? Let me guess... None. Yeah, keep believing that if GM and Ford weren't around that car assembly workers in the U.S. wouldn't be making (actually assembly wouldn't probably be here just like with DVD players and TVs) nearly the amount they do no matter for whom they work.
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John Hawkins 8:31AM (11/10/2008)
The general trend is to manufacture locally due to tax and goodwill, and in general shipping cost. Lets face it, an SUV costs far more to mfg in malasia and ship to the US than a DVD player especially in a business with declining margins.
Lithous 6:05PM (1/31/2007)
I meant to write: to keep the UAW away...
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John Smith 6:06PM (1/31/2007)
My comment disappeared.
I was going to say that the Toyota workers earned their keep.
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hotcams 6:08PM (1/31/2007)
I think that's a smart way. A competitive base, but with a larger variable pay component (10% - 20% of base) in the form of bonuses.
Works well by helping to lower the costs of manufacture compared to rivals. As competively priced car sales rise, variable pay component can be adjusted according to the performance of the entire unit. Gives the company plenty of financial breathing space and helps fend off unionization.
For sure high labor costs aren't domestic manufacturers only challenge.
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Tool 6:28PM (1/31/2007)
I love how the Detroit Free Press frames the news: "UAW losing pay edge".
Typical Detroit stinkin' thinkin'.
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Abraham 7:00PM (1/31/2007)
Domestic companies are failing because they did not finance the retirement of current employees, much like social security, they adopted a pay-as-you-go approach.
This should never be allowed.
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dave 7:30PM (1/31/2007)
then take the benefit packages and add them all up. now let's see who comes out on top.
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John Hawkins 8:32AM (11/10/2008)
Fortune Magazine reports:
Healthcare cost per vehicle:
$1635 (UAW) $215 (Toyota/Nissan)
Line Relief (extra uneeded wrkrs) cost/vehicle
$630 (UAW) $0(Toyota/Nissan)
Quality Issues Cost/Vehicle
$815 est (UAW) $118 est (Toyota/Nissan)
Robert 7:36PM (1/31/2007)
There are actually a couple layers to union costs and structure that this article completely misses.
Unions, in and of themselves, are not dangerous entities if they are willing to work with the company management during ebbs and flows. Further, there must be ways to flexibly hire good workers and fire bad ones. Then, facilities need to be able to reallocate workforces to particular areas if demands on a plant change (flexible manufacturing of products). Finally, facilities need to be able to reorganize themselves in response to product launches, upgrades, etc and ask for things like overtime and adaptability of individual functions and jobs. All of this has to be available without the threat of strike or perpetuated worker resentment (mob mentality).
So, just based on those limited requirements, tell me if Toyota has a total cost advantage, even if they paid in salary 10-20% more per worker than Ford or GM? The answer is yes.
Then, take into account health care, pensions and other benefits that have been promised to UAW workers of the Big Three and are guaranteed through contracts.
Tell me if you think Toyota, without anywhere near the same pension obligations even when their workforce ages and more balanced sharing of health care costs in the long term, has a lower total cost structure even if they paid 30-40% more than UAW workers, and the answer is probably still yes.
Now, this fact doesn't exempt product managers and executives at GM and Ford who have completely screwed up the product lines, but now that both companies seem to have decent leadership teams in place, they need these flexibilities from the UAW. Most importantly, if Ford and GM are to survive, they need certainty, not uncertainty (future pension costs, future health care costs, future strikes and shut downs). Japanese companies have that certainty with 401ks, shared health care costs and no unions to strike.
But, going into the 2007 negotiations, I would argue that the mistakes of the past are past. We are in the present now and the management teams, at least at Ford, are significantly different. Although not all plants have what I would consider completely competitive products yet, if I were the workers in Ford's Oakville or Louisville plants or GM's Kansas City plant where the Malibu will be produced, I would be pleased with good products on my line and working with the management going forward to ensure quality, flexibility and certainty. That means working some overtime if needed, being flexible with my work station, retraining and not striking. In return I would demand relatively good wages.
I would argue that the fair market value for UAW workers is MUCH lower than Toyota workers under current contracts because of the loopholes and uncertainty that exist in them. Eliminate uncertainty (this is both a company and UAW effort - one can't eliminate confrontational attitudes alone) and you can see increasing salaries. Eliminate the inflexible roles and relatively inflexible hiring, firing, retraining and reassigning practices, and you can expect even more increases (this again is a joint effort) over time.
From what I understand, at least from Ford's side, Mullaly has already begun his outreach. Given his past success in labor relations, I would venture to guess that if the unions work with him, providing certainty and flexibility, he can guarantee wages and return some level of certainty to them. If the union is inflexible, there is nothing that can save Ford, if not the other domestics as well.
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naif 8:00PM (1/31/2007)
"to the victor goes the spoils"
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Dave in MI 8:51PM (1/31/2007)
You would also need to deduct the union dues that members pay to have their leadership and union halls. These dues are not insignificant.
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Frank 9:18PM (1/31/2007)
I just wanted to thank everyone so far for not turning this into some kind of bitchfest between domestic and imports. Good posts so far especially number 8. This is the way it should be!
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Brian W 9:25PM (1/31/2007)
#11 LOL
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bernie 9:31PM (1/31/2007)
Here's a concept... pay commensurate with performance. The UAW allows rampant absenteeism, dringing and pot on the job, while fighting change tooth and nail at the domestics. Then they blame the demise on bad management. Toyota, Nissan and Honda workers keep their mouths shut, work hard and get rewarded when the company does well.
Oh, and every five years or so they resoundingly tell the UAW to go to hell 70% - 30%. That's America!
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Brian W 9:41PM (1/31/2007)
#13 Apparently you haven't been in a modern auto plant. If this story was about Big 3 workers, they would all be lazy stupid overpaid workers. Why do Toyoya's cost so much if they make them for 2-4 grand less?
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lunchbox 9:44PM (1/31/2007)
#13...I know people who work for the UAW and work in factories. If they were found drinking and smoking pot on the job, they would be thrown out on their ass. And you make it sound like no one ever shows up to work. And the demise is mostly because of management. If all that stuff was going on, it should be the management's job to put it to rest. Also, management creates the drama and BS that goes on within the UAW. They are the ones that screw Ford and GM over because they get greedy. Talk to a factory worker. And I bet a lot of them will say that the UAW needs to get their shit together.
Anyways, I dont really find this surprising. But should ANY factory worker that puts a dash together or bolts a chair in be paid $30/hr? Nope. I dont care what company they work for.
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Barney 9:52PM (1/31/2007)
If an employee sees reward for good work, they work harder. Unfortunately a union sees it as breaking rules. Senior members get higher pay, simply because they hung in. Unions may be responsible for higher pay but certainly not for better work.
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lunchbox 10:16PM (1/31/2007)
#16...So all those awards and accolades that go to UAW-run factories dont mean anything? And they dont do better work? In some cases they may not. But if you look at the majority of UAW workers, they appreciated what they do and take A LOT of pride in their work. They arent all fat and lazy because #13 said so...
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Petey 11:13PM (1/31/2007)
Its pretty simple, when Ford files for Chapter 11 sometime late this year (or early next) none of this will matter. All those Ford employees will be screwed except for those UAW fatcats at the top who are protecting their jobs... good bye UAW.. good riddance.
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