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.

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[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.