• Feb 9th 2007 at 5:28PM
  • 32
Here's something you might have seen coming. We've talked about how labor costs have been one of the major factors cited as keeping the domestic automakers behind the 8-ball regarding profitability compared to Japanese competitors. Sure, there's more to it than that, but the fact remains that labor costs are high on the list. How does that effect foreign automakers that have domestic workforces? About how you'd expect. Toyota, for one, is warning that U.S. labor costs could severely curtail their profits in the not-too-distant future.

Continues after the jump

[Source: Freep]

The Detroit Free Press got its hands on a report by Seiichi (Sean) Sudo, president of Toyota Engineering & Manufacturing in North America, which tells senior management about the labor situation. In it, he outlines a recommended plan to keep wages more in line with local manufacturing than with just auto manufacturing compensation nationally. This should create an interesting situation in the next few years as Toyota tries to keep costs down. The stated goal is to reduce the projected $900 million in labor costs by one-third by 2011.

Intriguing, especially when one considers UAW moves to guarantee wages and employment in the industry. Some of Toyota's non-union workers actually out-earned domestic union workers last year, according to the Freep. It's a fascinating read, as it gets deeper into the psyche of Toyota, which despite record profits, keeps its eyes on the future and possible crises ahead. It also discusses the ramifications of Toyota's moves on negotiations between the UAW and domestic automakers. Click the read link for the story in its entirety.

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    • 1 Second Ago
      • 8 Years Ago
      The writer of the repot can say all he wants but Toyota isn't going to take away from the American worker. How do I know? Because profits are not that import to Toyota: http://www.autoblog.com/2005/07/14/toyota-chief-profits-not-that-important/

      We don't want to be #1, we do want to be #1.
      We don't care about profits, we do care about profits.

      Are they politicians or car makers?

      I'm starting to think that Toyota wanted to own Fuji (not just the small percent they ended up buying when GM let their interest go, Toyota wanted to own all of Fuji) a while ago because that would have made them #1 in world sales much earlier. They may still persue it so that it would take GM even longer to overcome Toyota/Hino/Subaru sales to be #1 if GM were to make a comeback.

      • 8 Years Ago
      There's still a few more years left in those tax breaks the local and state governments lavished them with. Once those expire, then those folks will be in the same position as all the SoCal Nissan workers (move to TN or find a new job).
      • 8 Years Ago
      "As long as industries in more advanced countries are willing to transfer technology to less advanced countries in order to take advantage of cheap labor, which Adam Smith didn't really envision when developing the theory of comparative advantage,"

      Translation: Adam Smith did not understand the concept of sell-outs that are willing to let others have all your countries riches as long as they make a buck?

      "America basically is exporting her wealth. I have one question, when all of the jobs are gone, who's going to buy their goods?"

      The American consumer has to take 50% of the blame (supply and demand). I mean, if Apple put the Ipod on the shelves and we turn it over before purchasing and saw "Made in China" and left it on the shelves and emailed them that we are buying it until they make one with labor for the same price (which they could because it is the cost it is because of the profits they want and not because the technology is so revolutionary. iTunes is just slightly more "revolutionary" than the iPod but neither is anythng to wonder over). Or if at the very least, we Americans didn't buy something of cheap labor (as seen by the "made in" label) whenever there was a choice not to.

      "Basically, because of greed, we're all screwed. On that note, I have no sympathy for Ford, GM, IBM, Dell or any of those bastards. While I don't cheer when they fail, I don't cry either."

      Yes, both corporate and consumer ("I need the cheapest price") greed.
      • 8 Years Ago
      History will always repeat itself. Manufacturing has followed the least expensive labor throughout history. The production economies sooner or later move to consumer economies and around that time standards of living decrease.

      • 8 Years Ago
      As for 60 Gs, i live in NYC, it is a lot of money for us here.
      rrr I won't even respond to your original post, David already did.

      Both my wife and I work in Manhattan, and live in NJ. Combined we more than triple the $60K that you're talking about. We're comfortable. Modest pest and rodent free 3bdr home in the 'burbs, 3 kids, 1 car. It's tought as hell. $60K per year ain't shit. Not if you've got a life.

      LIFE = Groceries, Taxes, Transportation cost to and from work, health ins, Life ins, retirement savings (not depending on Social Security) and most important college funds for the kids. We do one social event per month as a family(Dinner, or movies, or a good concert at the Performance Arts Center and one vacation per year.

      I work in the banking industry on Wall St. Wall St. is the source of all that's right and all that's wrong with America today.

      Public traded companies have basically prostituted themselves for the pimps on Wall Street. It's no longer good enough to make a good product and sell it for a reasonable profit. They must cut costs, so quality suffers, they must further improve profitability, so employees suffer. America basically is exporting her wealth. I have one question, when all of the jobs are gone, who's going to buy their goods?

      Basically, because of greed, we're all screwed. On that note, I have no sympathy for Ford, GM, IBM, Dell or any of those bastards. While I don't cheer when they fail, I don't cry either.

      • 8 Years Ago
      You know what they say: can't pay a white man $2 an hour to do what an asian will do for $2 a week!
      • 8 Years Ago
      Keep buying them so called American Toyota`s. One day Toyota will pull out then what? GM and Ford will still be pulling in money for this country even if they have to do their manufacturing elsewhere to stay competitive.
      Right now Toyota is rolling in money yet they`re rumbling about labor cost? They also want to share (gain)technology with (from) the domestic makes. Toyota wants to squash the American auto industry and ask us to help them do it.
      Toyota is a douchbag of a company.
      Sorry if I offend any of those here who work for Toyota. You are the people who make Toyota successful. I`m just saying watch your back!

      Pray for the American automaker, they are the life blood of this country!
      • 8 Years Ago
      rrr, in your feeble attempt to sound like a hard core rush limbaugh conservative rebublican, you have done nothing more than made yourself look more of a fool than we always thought you were.
      for starters, lets just give it all up and send All the auto manufacturing south of the border. roughly three quarters of a million jobs gone, now the small manufactures, the ones that make the parts, let them go as well roughly 2.3 million jobs. then there's the truckers that deliver the cars, can't do without them, so let's just knock their pay in half. now the towns and cities that depend on all of them for taxes to build the infrastructure, and the stores, resturants, shops, etc.that depend on those workers to spend money in their shops, well, they don't need the money. oh hell, let's just shut down the whole country and outsource everything. including what, if anything, you do for al living. afterall, alls we need is the RICH people in this or any country to keep the economy rolling.
      i live in the midwest and know lots and lots of people that 60K per year is, (after housing, utilities, food, gas, a decent car, good schools, and maybe going out to dinner or a show once a month) a wage that lets you live week to week.
      you're clueless.
      the unions are'nt the threat to the usa, idiots like you are the threat. i'm retiring in two years and i can only pray that we baby boomers don't leave the country in the hands of boneheads like you!
      • 8 Years Ago
      WHO WILL BE ABLE TO AFFORD AND BUY these vehicles when the entier U.S. workforce is being paid minimum wage??????
      • 8 Years Ago
      Toyota is relatively new to North American. Over several decades the NA auto manufactures have been catered to by American & Canadian governments. Their product will have to overcome the shortcomings and disadvantages. Toyota is a leader in the assembly system and in fact several books have been written about it. Even GM had hired Toyota personal (with Toyota support) to teach them a more efficient assembly procedure. Toyota won't be able to fight off the major expense of a union, so hopefully their technique will prevail. It would be a shame to see so many Canadians & Americans out on a job search.
      • 8 Years Ago
      Don't take offense at what I said, I didn't mean to imply that obtaining a college degree is easy, my point was simply that having one doesn't make you smarter than they guy with out one. I would have gone after a degree if my circumstances would have been different, but unfortunately for me things were a bit too tough to swing financially and I lacked the interest somewhat at the time. I did attend college for about two semesters, than my troubles started. To sorta back up my theory I would like to use our current President. Hes a college man right? lol
      • 8 Years Ago
      Well it seems to me that the future of auto business lies outside of USA. I really do not think that any industry can afford to pay $60,000 plus full healthcare to people who have High School degree or some college, and who live in South or Midwest, where cost of living in much more affordable. Just to point out, people with 4-year degree in Finance, or Computer Information Science probably will not be making 60,000 in their first 6-7 years out of college.

      All this leads to one conclusion, that is automakers, all of them, not just two Detroit Deadbeats suffer some major financial crisis, they will move at least some of their plants to Asia or South America. Because for $60,000 you can probably have a PhD assemble your cars in S America, China or India.

      Also as global trade increases, shipping costs will come down and it will be possible to ship to USA all sorts of car, not just big-ticket cars.

      It seems to me that the only language UAW understands is the language of fists and blows.

      However in my opinion the biggest threat to USA is not UAW, it is SEIU, by far the scariest union. Why are they so scary? They have many many many government employees and nurses, and these people with almost no education make as much as and in many cases more than UAW people, and they will do everything possible to hold on to their jobs, plus their jobs are not outsourceable.

      I believe everyone should have healtcare, which is something all unions fight for, HOWEVER i do not believe that it is OK to elect politicians into office, and later have them give you yet another salary increase, ala SEIN and teachers unions.
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