"What about the $2.8 Billion in revenue they lost in currency exchange just the last quarter?"
You're on the wrong thread. This thread is about labor costs. Ask someone to keep you focused.
"But you want the Americans to work for less when they can hardly afford one now."
First of all, I don't care if the Americans....I should say UAW members....work for less or not. I'm saying these wages will continue and maybe accelerate the move to lower cost countries for production.
Second, the base rate UAW member (without OT and benefits) will make $60K in the first year of the contract, and between $50-55K in the next three years. If he can't afford a new car with that pay, I guess he'll have to be content with a used one. How much do you make every year (I don't really want to know, just think about this) and you buy a new car every couple of years.
"The Japanese and Koreans the two countries that the American work is paying to keep troops in both countries not the Mexican workers "
Once again, we are discussing UAW labor costs. Stay focused.
"About 1% of one year annual sales divided by 4..or 0.25% a year"
Yea, you're right. GM probably doesn't care much about $1.5 billion....I can't even say that with a straight face.
"But they can't afford to buy the product."
So what? I told you once before, Mexico isn't much of a selling market, it is a low cost manufacturing source. Try and remember this time.
"Isn't GM in business to sell what they build?"
They sell every single one they make in Mexico.
"Keep moving jobs out creating more red ink and loss of sales to consumer that won't buy a imported vehicle"
Loss of sales? Where do you see that happening. All good news on sales lately. Don't facts screw up good UAW propaganda? Who won't buy an imported vehicle...please don't use yourself as an example, we know better.
"Yes the new contract has modest wage increases."
Well, Jayhawky, I'm not sure I would say modest. Here's how I calculate the total new cost including 2 x 3% wage increases, 2 x 4% lump sums, 4 x $1,000 annual performance bonuses, $8,000 signing bonus, $2,000 additional lump sum for permanent employees, $500 annual quality award, $500 retiree gift cards, and 1300 new skilled trades employees.
All of this comes to about $1.5 BILLION over the four years....just in INCREASED labor cost. BTW, you can hire 40,740 Mexican workers for 4 years with just the INCREASE of UAW labor costs.
"We both know the next technological breakthrough of robotics is here,and we both know that it is going to eliminate a substantial amount of the workforce. Your "senior guy" at GM may not be aware of this but I am pretty sure Mary Barra is."
Trust me, he is aware. Not only that, I'm not sure that many new applications for robotics are still around. If you look at the current body shops, paint shops, and stamping....just not sure how many new robotic applications there are. Much more limited applications in general assembly or power train operations. I'm sure there are a few, but not enough to make a significant dent. A lot of what goes on in power train applications is precision assembly that has limited opportunities for robots. Plus standard BOP (bill of process) in PT already dictates unloading of equipment is done automatically.
I would be happy to share my calculations with you if you so desire.
"Labor costs per vehicle at GM will drop to $2,350 in 2019 from $2,374 in 2014."
Persie...several things at work here. First of all, these costs are quoted on a per unit basis. I don't know what Bloomberg is using as volume projections, but if they are forecasting a higher rate of increase of volume compared to labor costs, that would make unit cost decrease even though total labor costs are going up.
From the Bloomberg article:
"The key to controlling the costs lies in using cheaper temporary workers, some Mexican production and retiring older, higher-paid factory hands over the next four years."
The key part of that sentence is "some Mexican production". I'm sure that the amount of work continuing to go to Mexico will AT LEAST equal attrition. Plus, I don't believe that new restrictions have been placed on the number of Tier II workers during this agreement.
The GM Highlights published by the UAW state that 3,300 jobs will have been "created or retained" during the course of this agreement. If there are 50,000 UAW members working at GM now, that means that there are 46,700 jobs in play.
So, based on all of the above, I can see that labor costs will be a little lower on a per unit vehicle basis. As I have said on previous occasions, GM cannot allow labor costs to go up. They will find a way to control them by not replacing attrition, moving more to MX, outsourcing, etc.
"Now, with all due respect to WNGR, he didn't tell you HOW GM (and likely the others of the Big 3), are going to do it. I know some of those answers and wngr may feel obliged to share those as well IF it is information that can be shared."
I don't specifically know what plans are already in place. GM ALWAYS has a list of cost savings developed and being worked on to insure budget compliance. In fact, these are called "Budget Sufficiency Plans" and provide assurance that budgeted levels will be achieved. They already know how these savings will be accomplished.
"In the past, we've heard the UAW chant, "FULL PAY 'TIL THE LAST DAY!""
I hadn't heard that one to be honest. It clearly shows they understand the destructive policies they are pursuing.
It's strange. You can tell them and tell them what is going to happen, but when the shoe drops, everyone in the union is shocked. I had that experience once. I told the local union their plant was shutting down and they were flabbergasted even though this had been the conversation with them for three successive sets of negotiations.
Telling people their plant is closing is the hardest thing I've ever done.
"Total CEO pay includes all pay required to be reported by the SEC, which can include incentive compensation that was paid, but not yet earned."
Thanks Jeye. You made my point for me.
"Thought they said they'd take some of the costs out of their job reinvestment budget."
There's really no such thing as a job reinvestment budget. It's capital and tooling for new models. It's just called things like job reinvestment because it sounds good for contract ratification. With the increase in costs due to the new contract, some of that job reinvestment money will be spent in pesos.
Had a conversation with a senior guy in GM today. They've put out the word that the increased costs as a result of the new contract HAS to be taken out in whatever way necessary. No prices will be raised as a result.
"Every GM vehicles I've had since 2002 has beat the rating while driving."
They aren't talking about fuel economy Jeye. They are talking about Nitrogen Oxide (NOx) emissions.
"It takes a lot of engineering time to clearly identify and manage all test requirements, ...."
No argument there, but isn't that already done? The EPA has issued the testing protocol to all OEM's to implement and submit their results.
Isn't all there is left to be done is verify the OEM's data vs what they submitted following their own test specs? Seems like that would reveal any cheaters.
"For example, it is not rational to devastate a manufacturing base and the knowledge, security and taxes that derive from that manufacturing base."
Hey Jeye, here's another guy that thinks the problem with American manufacturing is just stupid consumers.
"I'd rather have $18 trillion in debt @ 1% than $12 trillion @ 6%. Although we've added $6T in the last 8 years, we've also retired a goodly portion of that debt borrowed in the 1980s and 90s at huge interest rates."
Here's the bad news. We currently pay $229B in debt service in the Federal Budget. That amounts to about 6.1% of all outlays. Even the Obama Administration is saying that debt service will rise to $544B (11.1%) over the next 5 years.
That's nearly the amount to be spent on national defense ($598B). Does that make sense to you?
Here's the problem. A full 72% of our Federal Budget is spent on Human Services including Medicare, Social Security, and Income Security. It's all mandated by law, so in order to get our finances right, Congress has to change the laws that give away money. What's the likelihood of that?
"It can't hurt, but I think the debt works better. They have to play nice with somebody that owes them more than a trillion bucks!"
Maybe, but perhaps that's the reason they think they can push us around in the South China Sea. Maybe they think we have got to be smart enough not to resist our biggest creditor. Ha! We fooled them....we're NOT that smart!!
I remember one of the Joint Chiefs testifying that the biggest threat to the US isn't Russia, or China. He made the case that the biggest threat was our economic failure that has result in $18+ trillion of debt. He made the case that it would embolden our antagonists by convincing them that we are vulnerable and can't sustain long term actions.
Hard to argue with that.
"I don't care if someone wants to buy a German car but man, a Communist Chinese car is not the same thing."
Here's another way to look at that. I've always believed that the more business ties two countries have, the better their relationship was probably going to be. GM clearly has significant capital investments in China, and if the Chinese valued that continuing investment, wouldn't that be an incentive to play nice?
Maybe interlocking business arrangements are the way to finally get the world community to tolerate their neighbors. Just imagining.
So, not only do they lead us at lean implementation, they have their inherent wage advantage as well.
I mentioned before that we made the same power train products both in Mexico and US plants. No difference, same part numbers for engines and transmissions, so we had a natural data base for comparison. One of the metrics we paid VERY close attention to was man hours per unit (HPU). When we compared the HPU for the same product in the US and Mexico, the US had a very slight advantage in raw HPU (like maybe 1.5%). When we analyzed these numbers and took out the effect of automation in the US, the Mexicans had about a 5% advantage.
So bottom line, the Mexican operations were slightly more productive, but with a 10x advantage in wage structure. For both engines and transmissions, the average HPU were in the neighborhood of 3.5 man hours per unit. With a labor cost of $5/hour in MX, and about $50/hour in the US, the differential was $45/hour x 3.5 HPU = $157 per unit advantage to MX. We could ship these products from MX to anywhere in the US (even to our big plants in the Toronto area) for $12 per engine/transmission by rail. That represents about a 12% savings in total landed cost at the assembly plants.
So, the question becomes what do we do about it. I think we are faced with some very difficult choices in this country. The biggest problem I have is that we don't seem to even maintain this level of non-competitiveness, we want to add to it. The latest agreements do nothing to close the gap, but add money to both the Tier I and II workers. Sure, the signing bonuses are one time events, but the scheduled increases plus the scheduled lump sums add about 3.5% for each year of the contract. In 4 years, that adds to a 14% increase in compensation.
It appears to me that the elimination of auto manufacturing will take place over the next 20 years or so, in our lifetime.
"I encourage ANYONE to go to the UAW website where you can download the 2015 agreement, and go to page 50 and read Appendix J - Continuous Improvement Forum. The language goes to page 59, and then there are letters after that. I think it would be an eye opener for many."
I did what you suggested and have a few comments. Before I lay out those comments, I really want you to know that I recognize that tremendous improvements have been made between the UAW and the various management groups in terms of the broad description of production systems (whether it be Ford, GM, FCA, etc.). Clearly, these are all patterned off of the Toyota Production System whether we like to admit it or not. I also recognize that the atmosphere on the production floor is significantly different than it used to be as well. You and all UAW members should feel good about that. It's been a learning exercise for both management and the union.
I have to tell you though, this type of thing is happening all over the world, not just in the US with the UAW. The inclusion of the worker in the improvement process has been going on in Japan since the early 50's when Taiichi Ohno first visited Ford Rouge. It interesting that we in the US need a 1,000 page document to describe the relationships between management and the workers. We are catching up, no doubt, but others have a huge advantage in lean manufacturing.
The bad news is that this spirit of cooperation is not an advantage for us because, as I said before, everyone is doing it and many plants outside the US, particularly in Mexico, have embraced these systems as the way work simply gets done. In my experience, this methodology proceeds much faster in places like Mexico where there aren't walls to break down between management and the union. In the Mexican plants I was responsible for, they identified themselves more by their plant affiliations, not by union and management groups.
To be continued
""No, because they are not unskilled labor. In fact they are doing quite well, thank you."
What about other parents that wasn't as fortunate as you."
Then their kids could do what I did. Put myself through undergraduate engineering school. Then work my butt off and get the company to pay for my graduate degree in business. Never cost my folks a penny.
Move my family any where in the world that they thought I could help, work any shift they wanted me to. Do the best job I could. Use my imagination and training to look for ways the company could do better. Have a consistent track record of good performance.
Worked out OK for me. Can't complain.
"Sure none of it for big business."
Certainly some of it is to promote US businesses around the world. Some of it is to make sure we have allies around the world. And some of it is to make sure we have influence in places that are strategic to us.
"No hourly employee at GM cost $150 a hour with benefits maybe $75. The average for a 30 year employee would be a lot less over that lifetime.. "
Give it up Adrian. Jeye just doesn't have the tools to understand.
"Your job could be replaced by someone in India."
If that's true, why hasn't it?
"Ross Perot didn't like the way GM was being run, so they bought him off."
You have difficulty in sticking to the topic, don't you?