Toyota Begins to Feel the Cost of US Labor

Discussion in 'OT Driven' started by TriShield, Feb 9, 2007.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Toyota sweats U.S. labor costs

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    February 8, 2007
    BY JASON ROBERSON
    FREE PRESS BUSINESS WRITER

    Toyota Motor Corp. must hold down growth of its U.S. manufacturing wages and benefits, which are among the highest in the auto industry and are growing faster than the company's profit margin, according to a high-level company report obtained by the Free Press.

    The report from Seiichi Sudo, president of Toyota Engineering & Manufacturing in North America, said Toyota should strive to align hourly wages more closely with prevailing manufacturing pay in the state where each plant is located, "and not tie ourselves so closely to the U.S. auto industry, or other competitors."

    Sudo's report to top managers said the Japan-based company projected a $900-million increase in U.S. manufacturing compensation by 2011, and human resources officials were working on trimming that by one-third.

    The drive to hold down costs may boost UAW organizing efforts, if Toyota workers balk at the possibility of smaller raises, reduced benefits or greater demands for productivity gains. But the plan also illustrates that the world's most-profitable automaker is going to keep relentless pressure on Detroit and its signature industry.

    The Free Press reported last week that at least some nonunion Toyota workers for the first time last year earned more than UAW assembly workers for Detroit's automakers.

    Auto experts and Toyota's workers say it is ingrained in Toyota's culture to sweat over trying to save $300 million five years down the road even as the company rakes in more than $1 billion a month.

    "They worry about details. They never stop worrying," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "They encourage worrying in the company, from the top down."

    The root of Sudo's worry: Labor costs as a percentage of sales are growing faster than Toyota's profit margin.

    "This condition is not sustainable in the long term," he said in the report.


    But Toyota's plans to restructure wages and benefits may also embolden Detroit's struggling automakers, which will seek billions in concessions this summer during contract negotiations with the UAW. A recent Detroit Free Press-Local 4 Michigan Poll found that three-quarters of Michiganders say the UAW will have to make concessions to General Motors Corp., Ford Motor Co. and the Chrysler Group.

    "The companies in Detroit are going to say, 'Look, we're in dire straits here. We're going to have to follow what they do,' " said Kenny Harper, 48, who has 18 years' seniority at Toyota's flagship complex in Georgetown, Ky.

    Harper, who wants the UAW to represent Toyota workers, said he disagrees with the company on principle.

    "Now I can understand if the company is having a hard time," said Harper, who has been off work for 12 weeks while healing from shoulder surgery after an on-the-job injury. "I'm more than willing to work with that company to keep my job. But when they just take it because they want more, I don't agree with it at all."

    Sudo's 42-page report, which was left unsecured on computers at the Georgetown plant, says, "The U.S. auto industry pays among the highest manufacturing wages in the world. Compared with Japan and France, the U.S. auto industry pays 50% higher wages and over five times more than Mexico's auto manufacturers."

    The company acknowledged that the documents supplied to the Free Press were authentic.

    In a memo to workers at the plant after the report was circulated, Toyota noted that workers at Georgetown earned $3 an hour more than the U.S. auto industry standard. The Free Press reported last week the workers averaged $30 an hour, including bonuses.

    Currently, the median for comparable manufacturing jobs in Kentucky -- half earn more, half earn less -- is $12.64, according to the U.S. Department of Labor.

    Toyota's strategy resembles what Hyundai Motor Co. uses at its plant in Montgomery, Ala. Assembly workers there make $14 an hour, about half the wages, bonuses and benefits of Toyota, Honda, Nissan and Detroit's automakers. But Hyundai's wages still are considerably higher than for comparable Alabama jobs, which pay $10.79 an hour.

    "Our challenge will be how to educate team members and managers about our condition, so that they can understand and accept change," Sudo said in the report.

    Among the changes would be greater use of on-site medical clinics and the introduction of on-site pharmacies to combat rising health care costs. Toyota's language regarding North American health care inflation largely echoes that of Detroit's automakers.

    The issues and solutions were laid out in a plan that also addressed quality, development of people and suppliers and the 5-year production plan. The idea behind such a so-called hoshin plan is to ensure all employees understand and work toward the same long-term goals.

    Richard Mason, 45, who works the second shift at Toyota's Georgetown plant, said few of his coworkers seemed concerned about Toyota's plans.

    "Most people I talk to in the plants say it's no big deal, which saddens me," said Mason, who also wants union representation. "They say, 'Hey, I've got it made now. I don't really care.' "


    But Harley Shaiken, a professor at the University of California, Berkeley, who specializes in labor issues, said Toyota's effort to hold down labor costs does more than empower Detroit's automakers: It promotes Toyota as the industry's new labor leader.

    Nonunion automakers, with the exception of Hyundai, followed the UAW's lead to avoid unionization, Shaiken said.

    "It really represents a shift in direction," Shaiken said. "Up until now the UAW set wages for the industry and the talks in Detroit."

    In the follow-up memo, Toyota pointed out that workers at Georgetown and at New United Motor Manufacturing Inc. in Fremont, Calif., which Toyota owns with GM, are the highest-paid autoworkers in the United States.

    UAW Local 2244 President George Nano, who represents members at Fremont, the only plant where Toyota managers must negotiate with the UAW, said Toyota is just being greedy.

    His members, he said, are struggling to make ends meet in California's expensive Bay area, and he is afraid that cuts are coming.

    "Right now we're making good money. We have benefits. But you can see that it's coming," Nano said about the anticipated changes. "And I'll be damned if I'm going to let them take it away."

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  2. Mugatu

    Mugatu Ask me about market research. OT Supporter

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    Toyota is as bad as Walmart
     
  3. Nemesis_152

    Nemesis_152 I'm a delicate desert flower from Arizona.

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    :rofl: IB same shit GM and ford are going through.
     
  4. TriShield

    TriShield Super Moderator® Super Moderator

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    :roflw:
     
  5. Carwatcher

    Carwatcher OT Supporter

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    Soon they'll move to mexico and later to china.
     
  6. PAK88mm

    PAK88mm Kharkov CounterOffensive '43 "Mansteins Counterstr OT Supporter

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    ROFL at labor unions single handly bringing down the combustiable steam engine horse pulling thingy industry down to its knees!
     
  7. Astringent

    Astringent Hai!

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    And yet, GM and Ford would LOVE to be in Toyota's shoes right now.

    Auto workers AVERAGING $30+ an hour is ridiculous, though. Seriously.
     
  8. bheld

    bheld I'm paying you with your own money...

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    nobody has ever accused UAW union bosses of being intelligent
     
  9. Dr. Woo

    Dr. Woo Guns don't kill people

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    GM, Ford, and Chrysler have money problems with labor.

    Toyota is doing fine, expands to the U.S., and suddenly might have some money problems with labor.

    So who's saying the UAW isn't the problem again?
     
  10. TriShield

    TriShield Super Moderator® Super Moderator

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    They'd be better off if they didn't manufacture the majority of their products here. Wages and healthcare costs (no universal healthcare in the US) is killing them here. Toyota doesn't want to end up in the same situation.

    I suppose Hillary will fix this situation with her healthcare plan when she becomes President.
     
  11. S1L1C0N

    S1L1C0N New Member

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    Spammer! does this look like the leftlanenews.com forums to you asshole?
     
  12. S_rangeBrew

    S_rangeBrew Member Since 2001. My account got screwed up.

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    That's crazy. Those uneducated monkeys should be happy to make minimum wage. $30 an hour? Crazy. No wonder manufacturing is moving out of the USA. The unions are putting their own members out of business. No way an assembly worker should be making more than $16 an hour.
     
  13. Dr. Woo

    Dr. Woo Guns don't kill people

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    :rofl: I know you know better.
     
  14. Dr. Woo

    Dr. Woo Guns don't kill people

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    :hsugh:
     
  15. Astringent

    Astringent Hai!

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    Couple other things to consider, though. For example, the weakening dollar against the yen. The weakening dollar has hit many Japanese manufacturers pretty hard when trying to produce these vehicles at home and export them here.

    Also, having American manufacturing plants is good for the company's image... probably more than offsets higher wages. Toyota would be paying proportionally higher wages owing to the weak(er) dollar if they manufactured in Japan anyways.

    Of course, I'm incensed that these people b!tch over their wages when they make $30+ an hour for MANUAL LABOR.
     
  16. torchedthat

    torchedthat Nothing satisfies me but your soul

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    i always wonder how americans make money when we sit on our asses, have minimal productivity, and outsource all our labor... wheres the income come from ? :confused:
     
  17. Astringent

    Astringent Hai!

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    Toyota's workers aren't UAW members. I think that's a point of contention.
     
  18. Dr. Woo

    Dr. Woo Guns don't kill people

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    NONE of them are UAW?
     
  19. Astringent

    Astringent Hai!

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    Quoted from the above article:

    "UAW Local 2244 President George Nano, who represents members at Fremont, the only plant where Toyota managers must negotiate with the UAW..."

    and

    "which saddens me, said Mason, who also wants union representation."

    "Wants" implies "don't have."

    So this leads me to believe most of Toyota's workers are non-UAW.
     
  20. Dr. Woo

    Dr. Woo Guns don't kill people

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    Ah.

    I don't care enough about Toyota anymore to read any further than the headline. allthatshit.jpg and all that.
     
  21. Diesel66

    Diesel66 My standards for women is like rent-a-centers stan OT Supporter

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    Toyota's plants are in the South and unions are really weak there.
     
  22. GucciGucci

    GucciGucci Active Member

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    $30 an hr for an assembly job in Kentucky ?

    :ugh:

    In that area, they should start at $12-$13 and cap it at $20 after 10 years.

    And add some profit sharing/prooductivity incentives.

    Is it that expensive to live in Kentucky ?

    :o
     
  23. TriShield

    TriShield Super Moderator® Super Moderator

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    Good points, almost forgot about the weakening dollar.
     
  24. midnite

    midnite OT Supporter

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    ever hear about the US being a predominantly service oriented economy now? :hsugh:
     
  25. hsmith

    hsmith OT Supporter

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    lol, $30hr to screw on bolts

    jesus. they really need to just start training monkeys
     

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