July 9, 2011 in Business

Disparate labor costs likely to dominate auto union talks

Lower numbers at Chrysler compared with Ford, GM
Brent Snavely Detroit Free Press
 
Labor costs

Chrysler’s average hourly labor cost per worker was $49 per hour in 2010 – making it highly competitive with Asian automakers, which pay between $44 and $55 for U.S. workers’ wages and benefits, according to research. Ford says its hourly labor cost per worker per hour was $58 in 2010.

GM’s was about $56 per hour.

DETROIT – As the UAW prepares to kick off national labor talks later this month, the hourly wage and benefits costs of the Detroit Three and their rivals once again will take center stage, just as they did during the 2009 bankruptcy restructurings of General Motors Co. and Chrysler LLC.

But the massive, $20-plus hourly labor cost gap that existed between the Detroit automakers and some foreign rivals during 2007 negotiations has nearly vanished, and Chrysler’s low labor costs now are drawing attention.

“Never have labor costs diverged so much between the Detroit Three,” said Sean McAlinden, chief economist for the Center for Automotive Research.

Chrysler’s average hourly labor cost per worker was $49 per hour in 2010, close to the Asian automakers, which pay between $44 and $55 for U.S. workers’ wages and benefits, according to the research center. But GM and Ford Motor Co. pay much more.

Given the small gap that exists between GM and Ford and the top-paying Asian automakers, “the companies will not have a very strong case if they ask for concessions,” said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass. “The union will be able to say, ‘Well, we became leaner … so it is up to you guys now.’ ”

In 2007, UAW workers ratified contracts that allowed automakers to hire entry-level workers for $14 to $16 per hour – about half the traditional $28 per hour wage. That does not include the cost of benefits.

Chrysler has about 22,500 hourly workers in the U.S., or less than half of GM’s 49,000 hourly workers and compared with Ford’s 40,600.

“I think it’s going to be a hard bargaining session,” said Steve Stone, building chairman for UAW Local 862 at Ford’s truck plant in Louisville, Ky. “I feel we have to have cost-of-living back – without a doubt.”


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